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Exhibit 4.4a
EXECUTION COPY
PARTICIPATION AGREEMENT
(▇▇▇▇▇▇▇ A-1)
Dated as of May 1, 1999
among
AES EASTERN ENERGY, L.P.,
as Lessee
▇▇▇▇▇▇▇ FACILITY TRUST A-1,
as Owner Trust
DCC PROJECT FINANCE FOURTEEN, INC.,
as Owner Participant
BANKERS TRUST COMPANY,
not in its individual capacity, except as expressly provided herein, but
solely as Indenture Trustee
and
BANKERS TRUST COMPANY,
not in its individual capacity, except as expressly provided herein, but
solely as Pass Through Trustees
▇▇▇▇▇▇▇
COAL-FIRED GENERATION FACILITY
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TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT.................................2
SECTION 2 PARTICIPATION; CLOSING DATE; TRANSACTION EXPENSES...........................................3
Section 2.1 Agreements to Participate........................................................3
Section 2.2 Closing Date; Procedure for Participation........................................4
Section 2.3 Transaction Expenses.............................................................4
SECTION 3 REPRESENTATIONS AND WARRANTIES..............................................................4
Section 3.1 Representations and Warranties of AEE............................................4
Section 3.2 Representations and Warranties of the Owner Trust...............................17
Section 3.3 Representations and Warranties of the Owner Participant.........................19
Section 3.4 Representations and Warranties of the Lease Indenture Company...................21
Section 3.5 Representations and Warranties of the Pass Through Trustee......................23
SECTION 4 CLOSING CONDITIONS.........................................................................24
Section 4.1 Operative Documents.............................................................25
Section 4.2 Equity Investment...............................................................25
Section 4.3 Certificates and Loan...........................................................25
Section 4.4 Entity Documents................................................................25
Section 4.5 Representations and Warranties..................................................25
Section 4.6 Officer's Certificate Regarding Disclosure......................................26
Section 4.7 No Lease Events of Default; Events of Loss; Satisfaction of Conditions..........26
Section 4.8 No Threatened Proceedings.......................................................26
Section 4.9 Consents .......................................................................26
Section 4.10 Governmental Actions...........................................................26
Section 4.11 Insurance .....................................................................26
Section 4.12 Engineering Report.............................................................27
Section 4.13 Environmental Report...........................................................27
Section 4.14 Survey ........................................................................27
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Section 4.15 Appraisal; Condition of the Facility...........................................27
Section 4.16 Market Report..................................................................27
Section 4.17 Fuel Report....................................................................27
Section 4.18 Opinions of Counsel............................................................27
Section 4.19 Recordings and Filings.........................................................28
Section 4.20 Funding of Accounts; Payment Undertaking.......................................28
Section 4.21 Taxes .........................................................................28
Section 4.22 No Changes in Applicable Law...................................................28
Section 4.23 Registered Agent for AEE.......................................................29
Section 4.24 Off-Balance Sheet Treatment....................................................29
Section 4.25 Rent Adjustments...............................................................29
Section 4.26 Title Insurance................................................................29
Section 4.27 Acquisition of Assigned Assets.................................................29
Section 4.28 Credit Rating..................................................................29
Section 4.29 Working Capital Facility.......................................................29
Section 4.30 Pro Forma Balance Sheet........................................................29
Section 4.31 FERC Certification.............................................................30
Section 4.32 Vibration Agreement............................................................30
Section 4.33 Ash Disposal...................................................................30
Section 4.34 Parent Guaranty................................................................30
Section 4.35 Coal Hauling Agreement and Interconnection Agreement...........................30
SECTION 5 AFFIRMATIVE COVENANTS OF AEE...............................................................30
Section 5.1 Maintenance of Existence........................................................31
Section 5.2 Required Notices................................................................31
Section 5.3 Delivery of Financial Statements; No Default Certificate; Annual
Operating Budget; Monthly Operations Report...........................31
Section 5.4 Books and Accounts..............................................................34
Section 5.5 Compliance with Law.............................................................34
Section 5.6 Maintain Licenses and Permits...................................................34
Section 5.7 Pay Taxes ......................................................................35
Section 5.8 Maintain AEE Subsidiaries.......................................................35
Section 5.9 Annual Operating Budget.........................................................35
Section 5.10 Further Assurances.............................................................36
Section 5.11 Public Utility Regulation......................................................36
Section 5.12 Certain Tax Treatments.........................................................36
Section 5.13 Liens .........................................................................37
Section 5.14 Indenture .....................................................................37
Section 5.15 Support Agreements.............................................................38
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Section 5.16 Notice of Payment of Supplemental Rent.........................................39
Section 5.17 Independent Forecast...........................................................39
Section 5.18 Legally Distinct Parcel........................................................40
Section 5.19 Coal Hauling Agreement.........................................................40
Section 5.20 AEE Revenues...................................................................40
Section 5.21 Maintenance of Payment Undertaking Agreements..................................40
Section 5.22 Assignment of Payment Undertakings.............................................41
SECTION 6 NEGATIVE COVENANTS OF AEE..................................................................41
Section 6.1 Incurrence of Indebtedness......................................................41
Section 6.2 Restricted Payments.............................................................41
Section 6.3 Merger, Consolidation...........................................................43
Section 6.4 Limitation on Liens.............................................................44
Section 6.5 Limitations on Activities of AEE................................................44
Section 6.6 Prohibited Transactions with Affiliates.........................................44
Section 6.7 Limitations on Investments......................................................44
Section 6.8 No Abandonment..................................................................45
Section 6.9 Assignment .....................................................................45
Section 6.10 Coal Hauling Agreement.........................................................47
Section 6.11 Interconnection Agreement......................................................47
SECTION 7 COVENANTS OF THE OWNER TRUST...............................................................48
Section 7.1 Covenants of the Owner Trust....................................................48
Section 7.2 ...........................................................48
---------------------
Section 7.3 ...........................................................48
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SECTION 8 COVENANTS OF THE OWNER PARTICIPANT.........................................................49
Section 8.1 Restrictions on Transfer of Beneficial Interest.................................49
Section 8.2 Owner Participant's Liens.......................................................51
Section 8.3 Amendments or Revocation of Trust Agreement.....................................51
Section 8.4 Instructions....................................................................52
Section 8.5 Appointment of Successor Trustee................................................52
Section 8.6 Certain Tax Treatments..........................................................52
SECTION 9 COVENANTS OF THE LEASE INDENTURE COMPANY AND PASS THROUGH TRUSTEES.........................53
Section 9.1 Indenture Trustee's Liens.......................................................53
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SECTION 10 INDEMNIFICATIONS..........................................................................53
Section 10.1 General Indemnity..............................................................53
Section 10.2 General Tax Indemnity..........................................................60
SECTION 11 AEE RIGHT OF QUIET ENJOYMENT..............................................................71
SECTION 12 SUPPLEMENTAL FINANCING....................................................................72
Section 12.1 Financing Modifications........................................................72
Section 12.2 Optional Refinancing of Pass Through Certificates..............................74
SECTION 13 LIMITATIONS OF LIABILITY..................................................................75
Section 13.1 Limitation of Liability........................................................75
SECTION 14 SPECIAL LESSEE TRANSFER...................................................................76
Section 14.1 Special Lessee Transfer.........................................................76
SECTION 15 RIGHT OF FIRST OFFER......................................................................78
Section 15.1 Right of First Offer...........................................................78
SECTION 16 MISCELLANEOUS ............................................................................79
Section 16.1 Consents ......................................................................79
Section 16.2 Successor Trustee..............................................................79
Section 16.3 Bankruptcy of Trust Estate.....................................................79
Section 16.4 Amendments and Waivers.........................................................80
Section 16.5 Notices .......................................................................80
Section 16.6 Survival ......................................................................81
Section 16.7 Successors and Assigns.........................................................82
Section 16.8 Business Day...................................................................82
Section 16.9 Governing Law..................................................................82
Section 16.10 Severability..................................................................82
Section 16.11 Counterparts..................................................................82
Section 16.12 Headings and Table of Contents................................................83
Section 16.13 Consent to Jurisdiction; Waiver of Trial by Jury..............................83
Section 16.14 Further Assurances............................................................83
Section 16.15 Effectiveness.................................................................83
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APPENDIX A:
Definitions
SCHEDULES:
Schedule 2 Pricing Assumptions
Schedule 2.3 Transaction Expenses
Schedule 3.1(d)(i) Governmental Approvals Obtained
Schedule 3.1(d)(ii) Governmental Approvals To Be Obtained
Schedule 3.1(f) Material Agreements
Schedule 3.1(j) Projections
Schedule 3.1(u) Environmental Exceptions
Schedule 4.19 Recordings and Filings
Schedule 5.3(a) Ineligible Transferees
Schedule 5.3(f) Form of Monthly Operations Report
Schedule 5.9 Form of Annual Operating Budget
Schedule 8.1(b) Initial Eligible Transferees
Schedule 16.5 Owner Participant Notice
EXHIBITS:
Exhibit A Form of Assignment and Assumption
Exhibit B Form of Owner Participant Parent Guaranty
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PARTICIPATION AGREEMENT
(▇▇▇▇▇▇▇ A-1)
This PARTICIPATION AGREEMENT (▇▇▇▇▇▇▇ A-1), dated as of May 1,
1999 (as amended, supplemented or otherwise modified from time to time, in
accordance with the provisions hereof, this "Participation Agreement" or this
"Agreement"), among (i) AES EASTERN ENERGY, L.P., a limited partnership
organized under the laws of the State of Delaware (herein, together with its
successors and permitted assigns, called "AEE"), (ii) ▇▇▇▇▇▇▇ FACILITY TRUST
A-1, a business trust organized and existing under the laws of the State of
Delaware, (herein, together with its successors and permitted assigns, called
the "Owner Trust"), (iii) DCC PROJECT FINANCE FOURTEEN, INC., a corporation
organized under the laws of the State of Delaware (herein, together with its
successors and permitted assigns, called the "Owner Participant"), (iv) BANKERS
TRUST COMPANY, a banking corporation organized and existing under the laws of
the State of New York, not in its individual capacity, except as expressly
provided herein, but solely as trustee under the Indenture (herein in its
capacity as trustee under the Indenture, together with its successors and
permitted assigns, called the "Indenture Trustee", and herein in its individual
capacity, together with its successors and permitted assigns, called the "Lease
Indenture Company"), and (v) BANKERS TRUST COMPANY, a banking corporation
organized and existing under the laws of the State of New York, not in its
individual capacity, except as expressly provided herein, but solely as trustee
under each of the Pass Through Trust Agreements (herein, together with its
successors and permitted assigns, called the "Pass Through Trustees").
W I T N E S S E T H :
WHEREAS, pursuant to the Asset Purchase Agreement, AES NY has
agreed to purchase certain coal-fired electric generating assets of NYSEG and
NGE, including the Facility and the Facility Site;
WHEREAS, AES NY has assigned to AEE the rights and obligations
of AES NY in its capacity as the "Buyer" under the Asset Purchase Agreement with
respect to the Facility and the Facility Site;
WHEREAS, the Owner Trust will acquire from NYSEG and NGE,
pursuant to the ▇▇▇▇ of Sale and the Deed, the Undivided Interest;
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WHEREAS, AEE desires to lease to the Owner Trust the Ground
Interest (which is a corresponding undivided interest in the Facility Site) and
to grant certain Easements to the Owner Trust pursuant to the Site Lease, and to
lease the Undivided Interest, sublease the Ground Interest and accept the grant
of the Easements from the Owner Trust pursuant to the Lease and the Site
Sublease, respectively;
WHEREAS, the Owner Participant desires to cause the Owner
Trust to take title to the Undivided Interest from NYSEG and NGE pursuant to the
▇▇▇▇ of Sale and the Deed, lease the Ground Interest and accept the grant of the
Easements from AEE pursuant to the Site Lease, and lease the Undivided Interest,
sublease the Ground Interest and grant the Easements to AEE pursuant to the
Lease and the Site Sublease, respectively;
WHEREAS, in connection with the execution and delivery of this
Participation Agreement, the Owner Participant has entered into the Trust
Agreement, pursuant to which the Owner Participant has authorized the Owner
Trust to enter into the Lease Financing; and
WHEREAS, the parties hereto desire to consummate the Lease
Financing.
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1
DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT
Capitalized terms used in this Agreement, including the
recitals, and not otherwise defined herein shall have the respective meanings
set forth in Appendix A hereto, unless the context hereof shall otherwise
require. The general provisions of Appendix A shall apply to the terms used in
this Agreement and specifically defined herein.
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SECTION 2
PARTICIPATION; CLOSING DATE; TRANSACTION EXPENSES
Section 2.1 Agreements to Participate. Subject to the terms
and conditions of this Agreement, and in reliance on the agreements,
representations and warranties made herein, on the Closing Date, the parties
agree to participate in the transactions described in this Section 2.1 as
follows:
(a) the Owner Participant agrees to provide funds in an amount
sufficient to (i) fund the Equity Investment and (ii) pay the
Transaction Expenses which the Owner Trust is responsible to pay
pursuant to Section 2.3(a) (collectively, the "Owner Participant's
Commitment");
(b) AEE agrees to (i) cause NYSEG and NGE to convey to the
Owner Trust the Undivided Interest on the terms and conditions set
forth in the ▇▇▇▇ of Sale and the Deed, (ii) lease the Ground Interest
and grant the Easements to the Owner Trust on the terms and conditions
set forth in the Site Lease and (iii) execute and deliver the Site
Lease; the Owner Trust agrees to (A) acquire the Undivided Interest
from NYSEG and NGE, (B) lease the Ground Interest and accept the grant
of the Easements from AEE and (C) execute and deliver the Site Lease;
(c) the Owner Trust agrees to lease the Undivided Interest,
sublease the Ground Interest and grant the Easements to AEE on the
terms and conditions set forth in the Lease and the Site Sublease,
respectively, AEE agrees to lease the Undivided Interest, sublease the
Ground Interest and accept the grant of the Easements from the Owner
Trust, and each agrees to execute and deliver the Lease and the Site
Sublease;
(d) the Owner Trust agrees to sell the Lessor Notes to the
relevant Pass Through Trustees and to grant the Indenture Trustee, for
the benefit of the Pass Through Trustees, liens and security interests
in the Indenture Estate to secure its obligations thereunder as, and to
the extent, provided in the Indenture;
(e) the Indenture Trustee agrees to act as trustee under and
enter into the Indenture, pursuant to which the Lessor Notes will be
issued;
(f) the Pass Through Trustees agree to use the Proceeds to
purchase the Lessor Notes from the Owner Trust;
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(g) the Owner Trust agrees to use the funds received from the
Owner Participant and the Pass Through Trustees pursuant to clauses
(a)(i) and (f), respectively, of this Section 2.1 on the Closing Date
to pay the Purchase Price;
(h) the Owner Participant and AEE agree to enter into the Tax
Indemnity Agreement; and
(i) the parties agree to enter into the agreements referred to
above and the other Operative Documents.
Section 2.2 Closing Date; Procedure for Participation.
(a) Closing Date. The closing of the transactions contemplated
hereby (the "Closing") shall take place after 11:00 a.m., New York City time, on
May 14, 1999 or such other date as the parties hereto shall mutually agree (the
"Closing Date"), at the offices of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(b) Procedures for Funding. Subject to the terms and
conditions of this Participation Agreement, the Owner Participant shall make the
Owner Participant's Commitment available not later than 9:00 a.m., New York City
time, on the Closing Date, by transferring or delivering such amount, in funds
immediately available on the Closing Date to the Owner Trust.
Section 2.3 Transaction Expenses. (a) The Owner Trust (with
funds provided by the Owner Participant) shall pay the Transaction Expenses as
set forth on Schedule 2.3 attached hereto. All Transaction Expenses in excess of
those required to be paid by the Owner Trust and any additional transaction
expenses associated with the Acquisition or the Lease Financing and not included
in Transaction Expenses, substantiated or otherwise supported in reasonable
detail, shall be paid by AEE.
(b) AEE shall also be responsible for, and shall pay as
Supplemental Rent, all annual administration fees and expenses of the Trustee,
the Indenture Trustee, the Pass Through Trustees and the Depositary Agent.
SECTION 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of AEE. AEE
represents and warrants to each of the other parties hereto that, as of the
Closing Date:
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(a) Due Organization, etc. (i) AEE is a limited partnership
duly formed, validly existing, and in good standing under the laws of
the State of Delaware, is duly licensed or qualified and in good
standing in each jurisdiction in which the failure to so qualify could
reasonably be expected to result in a Material Adverse Effect, and has
the partnership power and authority to own or hold under lease its
assets and properties, conduct its business as now conducted and as
presently proposed to be conducted and enter into and perform its
obligations under this Agreement and each of the other Operative
Documents to which it is or will be a party. The sole general partner
of AEE is AES NY. The sole limited partner of AEE is AES NY2.
(ii) Each of AES NY, AES NY2, AES NY3 and each AEE
Subsidiary in existence on the Closing Date is a limited
liability company duly organized, validly existing, and in
good standing under the laws of the State of Delaware, is duly
licensed or qualified and in good standing in each
jurisdiction in which the failure to so qualify could
reasonably be expected to result in a Material Adverse Effect,
and has all requisite power and authority to own, or hold
under lease, its assets and properties and conduct its
business as now conducted and as presently proposed to be
conducted.
(b) Due Authorization, Enforceability, etc. The execution,
delivery and performance of this Agreement and each of the other
Operative Documents to which it is or will be a party and the
compliance by it with the terms and provisions hereof and thereof have
been duly authorized by all necessary action of each of AEE and the AEE
Entities, as applicable, and such action does not and will not require
any further action, consent or approval by any trustee or holder of any
Indebtedness of AEE or such AEE Entities, as applicable. This Agreement
and each of the other Operative Documents to which it is or will be a
party has been duly executed and delivered by each of AEE and the AEE
Entities, as applicable. Assuming the due authorization, execution and
delivery by each other party hereto and thereto, this Agreement
constitutes, and when executed and delivered, the other Operative
Documents to which AEE or any AEE Entity is or will be a party will
constitute, the legal, valid and binding obligations of AEE or such AEE
Entity, as applicable, enforceable against AEE or such AEE Entity, as
applicable, in accordance with their respective terms, except as the
same may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, arrangement, moratorium or other laws relating to or
affecting the rights of creditors generally and by general principles
of equity.
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(c) No Conflicts. The execution, delivery and performance by
each of AEE and the AEE Entities, as applicable, of this Agreement and
each of the other Operative Documents to which it is or will be a
party, the consummation by AEE and such AEE Entities of the
transactions contemplated hereby and thereby, and compliance by AEE and
such AEE Entities with the terms and provisions hereof and thereof, do
not and will not (i) conflict with or result in any breach of any
agreement to which AEE or any AEE Entity is a party (including any
Material Agreement), (ii) conflict with any Applicable Law which could
reasonably be expected to result in a Material Adverse Effect, (iii)
conflict with the partnership agreement of AEE or the organizational
documentation of any AEE Entity or (iv) result in the creation of any
Lien (except Permitted Liens) upon any of the property or assets of AEE
and such AEE Entities pursuant to the terms of any indenture, mortgage,
deed of trust, credit agreement or any other agreement, contract or
instrument to which AEE or such AEE Entity is a party or by which any
of their respective property or assets are bound.
(d) Governmental Actions. Except for the Governmental
Approvals set forth on Schedule 3.1(d)(i) and Schedule 3.1(d)(ii), (i)
no Governmental Approval is required to be obtained in the name of AEE
or any AEE Entity or the Owner Trust in connection with (A) the
acquisition, operation and maintenance of the Facility, the Related
Facility and the Additional Facilities, (B) the issuance of the Pass
Through Certificates and the execution, delivery and performance by AEE
of the Operative Documents to which it is or will be a party, or (C)
the leasing of the Undivided Interest, and (ii) no Governmental
Approval (except Governmental Approvals applicable to the Owner
Participant, the Pass Through Trustees, the Owner Trust, or any
Certificateholder as a result of activities by such Person or any of
its Affiliates not contemplated by the Operative Documents and
Governmental Approvals applicable to such parties other than under the
law of the State of New York or the laws of the United States of
America) is or will be required (A) in connection with the
participation by the Owner Participant, the Pass Through Trustees, the
Owner Trust, or any Certificateholder in the consummation of the Lease
Financing or (B) to be obtained by any of such Persons during the Lease
Term, except in the case of either clause (i) or (ii), such
Governmental Approvals (1) as may be required by Applicable Law not now
in effect, (2) as may be required in consequence of any transfer of
ownership of the Undivided Interest by the Owner Trust, (3) as would be
required by Applicable Law upon termination or expiration of the Lease
in connection with taking possession of an interest in any assets of
AEE in accordance with the Support Agreements or any part thereof or
the property purported to be covered by the Site Lease, (4) as may be
required by Applicable Law, if, after termination or
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expiration of the Lease, AEE or any other Person should provide
transmission services for the Owner Trust, (5) as may be required in
consequence of any exercise of remedies or other rights by any such
Person in connection with taking possession of an interest in the
Facility or the property purported to be covered by the Site Lease, or
(6) required as filings pursuant to the terms of a Governmental
Approval (which filings AEE agrees to make promptly when required) and
other types of routine operating plans and filings required under
Applicable Law. All of the Governmental Approvals set forth on Schedule
3.1(d)(i) have been validly issued, are in full force and effect and
are non-appealable (except as indicated on Schedule 3.1(d)(i)) and
there is no proceeding pending, or to the Actual Knowledge of AEE,
threatened, which seeks to, or which may reasonably be expected to,
rescind, terminate, modify, condition, suspend or otherwise alter any
such Governmental Approval (except as are necessary for the transfer or
reissuance of such Governmental Approvals to AEE or any AEE Entity).
Set forth on Schedule 3.1(d)(ii) are those Governmental Approvals which
are required under existing Applicable Law to be obtained, reissued, or
transferred from time to time after the Closing Date and AEE does not
have any reason to believe that it will be unable to obtain such
Governmental Approvals in the ordinary course of business and at such
time or times as may be necessary to avoid any substantial delay in, or
material impairment to, the performance of the transactions
contemplated by the Operative Documents. Each of AEE and the AEE
Entities has obtained and is in compliance with all Governmental
Approvals required to be obtained by it as of the date hereof unless
the failure to obtain such approvals or such non-compliance therewith,
individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
(e) Litigation. There is no pending or, to the Actual
Knowledge of AEE, threatened action, suit, investigation or proceeding
at law or in equity by or before any Governmental Entity, against or
affecting AEE or any property or other assets or rights of AEE or with
respect to any Operative Document, the Undivided Interest, the Ground
Interest, the Facility, the Facility Site, or any of the other Assigned
Assets that, individually or in the aggregate, if determined adversely
could reasonably be expected to result in a Material Adverse Effect.
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(f) No Defaults. Neither AEE nor any AEE Entity is in default,
and no condition exists that with notice or lapse of time or both would
constitute a default, under the Lease or any other Operative Document.
Set forth on Schedule 3.1(f) is a list of all Material Agreements.
Neither AEE nor any AEE Entity is in default under, and neither AEE nor
any AEE Entity, to its Actual Knowledge, is aware of a default by any
other party to, any Material Agreement in any such case where any such
default, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect.
(g) Location of Chief Place of Business and Chief Executive
Office, etc. The chief executive office and principal place of business
of each of AEE and AEE 2 and the office where each of AEE and AEE 2
keeps its corporate records concerning the Facility, the Facility Site
and the Operative Documents is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
(h) Liens. (i) AEE has good record and marketable fee title in
the Facility Site, the Related Facility Site and the site of each of
the Additional Facilities, in each case free and clear of all Liens
other than Permitted Liens.
(ii) Upon execution and delivery of the Operative
Documents and recording of the instruments referred to in Part
I of Schedule 4.19 in accordance with Section 4.19, (A) good
and marketable fee simple title to the Undivided Interest will
be duly, validly and effectively conveyed and transferred to
the Owner Trust, free and clear of all Liens other than
Permitted Liens, (B) a good and valid leasehold interest in
the Ground Interest will be duly, validly and effectively
granted to the Owner Trust upon the terms and conditions in
the Site Lease, free and clear of all Liens other than
Permitted Liens, and (C) a good and valid easement estate in
the Easements will be duly, validly and effectively granted to
the Owner Trust upon the terms and conditions in the Site
Lease, free and clear of all Liens other than Permitted Liens.
(iii) When duly authorized, executed and delivered by
each of the parties thereto, the Indenture will create a valid
Lien in favor of the Indenture Trustee in the Indenture Estate
and no filing, recording, registration or notice with any
federal or state Governmental Entity will be necessary to
establish or, except for such filings and recordings as will
be made pursuant to Section 4.19, to perfect, or give record
notice of, the Lien of the Indenture to the extent such Lien
may be perfected by filings or recordings.
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(iv) When duly authorized, executed and delivered by
each of the parties thereto, the Mortgage will create a valid
Lien in favor of the Mortgagee in the Mortgaged Property and
no filing, recording, registration or notice with any federal
or state Governmental Entity will be necessary to establish
or, except for such filings and recordings as will be made
pursuant to Section 4.19, to perfect, or give record notice
of, the Lien of the Mortgagee to the extent such Lien may be
perfected by filings or recordings.
(v) When duly authorized, executed and delivered by
each of the parties thereto, the Assignment of Leases will
create a valid Lien in favor of the assignee thereof in the
Leases and Income (as defined in the Assignment of Leases) and
no filing, registration or notice with any federal or state
Government Entity will be necessary to establish or, except
for such filings and recordings as will be made pursuant to
Section 4.19, to perfect, or give record notice of, the Lien
of such assignee to the extent such Lien may be perfected by
filings or recordings.
(vi) None of the Permitted Liens shall, on and after
the Closing, materially interfere with the use, operation or
possession of the Facility (as contemplated by the Operative
Documents) or the use of or exercise by the Owner Trust of its
rights under the Site Lease with respect to the Facility or
the Facility Site.
(i) Financial Statements. The Pro Forma Balance Sheet, copies
of which have been delivered to the Owner Participant and the Pass
Through Trustees, and the assumptions used in preparing the Pro Forma
Balance Sheet were made in good faith and are reasonable and fairly
present the financial condition of AEE, as of the date of such Pro
Forma Balance Sheet, and all material assumptions with respect to the
Pro Forma Balance Sheet are set forth therein.
(j) Projections. All projections and budgets (including the
Base Case Projections) which are attached hereto as Schedule 3.1(j) and
which have been furnished to the Owner Participant or the Pass Through
Trustees by or on behalf of AEE (including projections and budgets
furnished by the Independent Engineer at the request of AEE) and the
summaries of significant assumptions related thereto (i) have been
prepared with due care in accordance with Prudent Industry Practices,
(ii) fairly present to the best of AEE's knowledge, AEE's expectations
as to the matters covered thereby as of their date, (iii) are based on
reasonable assumptions as to all factual and legal matters material to
the estimates therein (including interest rates and operation and
maintenance costs) and (iv) are, in all
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material respects, comprehensive and consistent with the provisions of
the Operative Documents.
(k) Use of Proceeds. All proceeds of the Purchase Price shall
be used for the acquisition of the Facility.
(l) Regulatory Status/Utility Regulation. Each of AEE and AEE
2 is an "Exempt Wholesale Generator" as such term is defined in Section
32 of PUHCA. Neither AEE nor any of the AEE Entities is regulated as a
"public utility company", or a "holding company", a "subsidiary
company" or an "affiliate", in each case, of either a "holding company"
or a "public utility company", as such terms are defined in PUHCA. None
of the Owner Trust, the Owner Participant, AEE, the AEE Entities, any
Certificateholder nor any of their respective Affiliates is nor, solely
by virtue of the execution, delivery or performance of, or the
consummation of the Lease Financing (and in the case of the Owner
Participant and the Owner Trust, assuming that the representations and
warranties of the Owner Participant and the Owner Trust set forth
herein are true and correct at all times), will be regulated as a
"public utility company," or a "holding company," a "subsidiary
company" or an "affiliate," in each case, of either a "holding company"
or a "public utility company," as such terms are defined in PUHCA nor
subject to any electric utility regulation under New York law. Neither
AEE nor any AEE Entity is subject to electric rate regulation under New
York law.
(m) Investment Company Act. Neither AEE nor any AEE Entity is
an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act.
(n) Securities Act. Neither AEE nor any AEE Entity (nor any
Person authorized by any of them) has directly or indirectly offered or
sold any interest in the Beneficial Interest, the Lessor Notes or the
Pass Through Certificates or any part thereof (or in any similar
security or lease, or in any security or lease the offering of which
for the purposes of the Securities Act would be deemed to be part of
the same offering as the offering of the Beneficial Interest, the
Lessor Notes or the Pass Through Certificates or any part thereof), or
solicited any offer to acquire any of the same, in violation of the
registration requirements of Section 5 of the Securities Act.
(o) Compliance With Laws. Each of AEE and the AEE Entities are
in compliance with all Applicable Laws, including, without limitation,
all Environmental Laws, and none of such parties has received any
written notice from any Governmental Entity of non-compliance with the
need to perform any
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work, make repairs or make any capital improvements in order to comply
with, or the imposition or threat of the imposition of penalties under,
Applicable Law, except as specified on Schedule 3.1(o) hereto and
otherwise, in the case of any Applicable Law other than Environmental
Law, where such non-compliance is the subject of appropriate
proceedings and could not reasonably be expected to result in a
Material Adverse Effect.
(p) Taxes. Each of AEE and the AEE Entities have filed, or
caused to be filed, all tax and information returns that are required
to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and
assessments payable by them, to the extent the same have become due and
payable, other than taxes the payment of which is being contested by
appropriate proceedings, in accordance with Section 5.7 and AEE has no
Actual Knowledge of any actual or proposed deficiency or additional
assessment in connection therewith which, either individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect.
(q) ERISA. (i) AEE and each of its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of
ERISA and the Code and the regulations and published interpretations
thereunder to the extent that they relate to any Plan with respect to
which AEE could have a direct or indirect, actual or contingent
liability except where such non-compliance could not reasonably be
expected to result in a Material Adverse Effect. None of AEE or any
ERISA Affiliate maintains or has maintained a Plan subject to Title IV
of ERISA within the last six years with respect to which any liability
continues to exist; provided, however, that pursuant to the Asset
Purchase Agreement, AEE is obligated to establish a Plan subject to
Title IV of ERISA effective as of the Closing Date. AEE is not (A) a
plan described in Section 3(3) of ERISA or Section 4975 of the Code or
(B) a "foreign person" as defined in Section 1445 of the Code.
(ii) Assuming the correctness of the representations of
the other parties hereto and of the Certificateholders in the
Certificates, the Lease Financing will not constitute a
non-exempt "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975(c)(1) of the Code (or in
the case of a governmental plan or church plan (each as
defined in ERISA) any substantially similar federal, state or
local law).
(r) Adequate Rights. (i) Based upon the reasonable
expectations of AEE, and subject to obtaining any necessary licenses,
permits and approvals from Governmental Entities, which under any
Applicable Law on the Closing Date the Owner Trust will be able to
obtain upon or before the expiration or earlier
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termination of the Lease Term, (A) the rights and interests made
available to the Owner Trust or its permitted transferees pursuant to
the Support Agreements and the other Operative Documents, together with
(B) all materials, supplies and services, including, but not limited
to, all natural gas, electrical, telephone, water, sanitary waste
disposal, ash disposal, rail, coal supply, septic or water treatment
system or services and all other utility services necessary for the
present use, operation and maintenance of the Facility (currently
available at the Facility, which to the Actual Knowledge of AEE are
connected under valid permits and in working order, in all material
respects) permit on a commercially practicable basis commencing with
the expiration or sooner termination of the Lease Term, (1) the
occupation, maintenance and repair of the Facility and the Facility
Site, (2) the use, operation, leasing and possession of the Facility
and the Facility Site, (3) the use, operation, leasing, possession,
maintenance, replacement, renewal and repair of all alterations,
modifications, additions, accessions, improvements, appurtenances,
replacements and substitutions thereof and thereto, subject to the
provisions of the Operative Documents, (4) appropriate ingress to and
egress from the Facility for any reasonable purpose in connection with
the exercise of rights under the Support Agreements and with the Owner
Trust's interest in the Facility and the Facility Site, including,
without limitation, access to dedicated public roads and to the Actual
Knowledge of AEE, all other material roads, easements, servitude,
rights-of-way and other rights of ingress and egress as are necessary
for the present operation, maintenance and use of the Facility, (5) the
procurement of other rights and services necessary or appropriate to
utilize the Facility in a commercial manner, (6) transmission services
from the Facility sufficient to enable the Owner Trust to sell its
share of the output of the Facility, and (7) the operation of the
Facility as an independent unit.
(ii) To the Actual Knowledge of AEE, in all material
respects (A) the electrical, plumbing, heating, drainage, air
conditioning, ventilation and other mechanical and electrical
systems on and in the Facility are in good working order and
repair and are adequate in quantity and quality for present
operation of the Facility by AEE under the Lease; and (B) the
Facility is otherwise in safe condition and there are no
structural or other patent defects in the roofs, and other
structural portions of the Facility, including walls, pillars,
supporting columns and foundations.
(iii) To the Actual Knowledge of AEE, other than
Permitted Liens, the use of the Facility does not in any
material respect depend on any variance, special exception or
other municipal approval, permit or consent that has not been
obtained for its present use, and all material
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building, construction and use related permits, approvals and
consents necessary for such use have been issued and are in
full force and effect; provided, that no representation is
made herein regarding zoning ordinances or regulations.
(iv) To the Actual Knowledge of AEE, no default or
breach exists under any covenant, condition, restriction,
right-of-way, easement or other agreement affecting all or any
portion of the Facility which is to be performed or complied
with by the owner or occupant of all or any portion of the
Facility the nonperformance of which could reasonably be
expected to result in a Material Adverse Effect.
(v) As of the Closing Date, there are no subleases,
rental agreements or other agreements conferring on any Person
other than AEE the right to use or occupy all or any portion
of the Facility or the Facility Site except those, if any,
reflected in the Title Policies.
(vi) To the Actual Knowledge of AEE, there are no
public improvements pending or intended that would result in
any charge or special assessment against the Facility, except
those, if any, reflected in the Title Policies delivered
pursuant to Section 4.26. To the Actual Knowledge of AEE, the
Facility is not subject to any material utility "tap-in" fees,
except those, if any, reflected in such Title Policies.
(s) Qualification to do Business. The qualification of the
Owner Participant, the Owner Trust, the Trustee, the Indenture Trustee
or the Pass Through Trustees to do business under the laws of the State
of New York or any political subdivision thereof is not required solely
as a consequence of the execution and delivery of the Operative
Documents, the making of the Equity Investment or the Loans or, prior
to expiration or termination of the Lease, the performance by the Owner
Participant, the Owner Trust, the Trustee, the Indenture Trustee or the
Pass Through Trustees of this Agreement or any other Operative Document
to which it is or will be a party, prior to the exercise of
dispossessing remedies under the Lease or the Indenture.
(t) Jurisdiction. In accordance with Section 16.13 hereof, AEE
has validly submitted to the jurisdiction of the Supreme Court of the
State of New York, New York County and the United States District Court
for the Southern District of New York.
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(u) Environmental Matters. For purposes of this Section 3.1(u)
only, "Actual Knowledge" shall include actual knowledge that would have
been obtained after reasonable inquiry in light of the circumstances
prior to signing the Asset Purchase Agreement and the limitations in
the Asset Purchase Agreement.
(i) Except as specifically disclosed in the
Environmental Report and Schedule 3.1(u), neither AEE, nor any
AEE Entity, nor, to the Actual Knowledge of AEE, NYSEG or NGE
has received from any Governmental Entity any written notice,
letter, citation, order, warning, complaint, inquiry, claim or
demand that: (A) there has been a release, or there is a
threat of release, of any Hazardous Substance in, on, under or
from the Facility or the Facility Site except for releases
authorized under or in compliance with Applicable Laws,
including Environmental Laws; (B) AEE, NYSEG or NGE have or
has any material liability for the costs of cleaning up,
remedying or responding to a release of any Hazardous
Substance pertaining to the Facility or the Facility Site or
(C) either the Facility or the Facility Site is subject to a
Lien in favor of any Governmental Entity in response to a
release of any Hazardous Substance;
(ii) Except as specifically disclosed in the
Environmental Report and Schedule 3.1(u), AEE, and to the
Actual Knowledge of AEE, each of NYSEG and NGE have taken all
required or necessary response actions, including any removal
or remedial or other response action, in respect of any
release, emission, discharge or disposal, or threat of
release, discharge, disposal or emission of any Hazardous
Substance, in, on, under or from the Facility or the Facility
Site, so as to be in material compliance with all Applicable
Laws, including Environmental Laws.
(iii) to the Actual Knowledge of AEE, except as
specifically disclosed in the Environmental Report and
Schedule 3.1(u):
(A) the Facility and the Facility Site and
the ownership, use, maintenance, modification and
operation of the Facility and the Facility Site are
now in compliance with applicable Environmental Laws
in all material respects;
(B) all Hazardous Substances generated,
maintained, produced, manufactured, processed,
distributed, used, treated, managed, stored,
contained, recycled, transported or handled on, to,
at or from the Facility or the Facility Site have
been disposed of
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in compliance with applicable Environmental Laws in
all material respects;
(C) no material Hazardous Substances are
located in, on, at or under the Facility or the
Facility Site, except to the extent incidental to the
current use of the Facility or the Facility Site, and
AEE, and to the Actual Knowledge of AEE, each of
NYSEG and NGE has not and is not currently
maintaining, producing, manufacturing, processing,
distributing, handling, treating, managing,
containing, recycling, transporting, releasing,
emitting, discharging, depositing, generating,
storing, disposing of or creating any Hazardous
Substances in its ownership, alteration,
modification, construction, use, operation or
maintenance of the Facility or the Facility Site
other than in compliance with applicable
Environmental Laws in all material respects;
(D) there are no material Environmental
Conditions with respect to the Facility or the
Facility Site;
(E) no Hazardous Substances have been
released at, to, under, about or from the Facility or
the Facility Site other than in compliance with all
Environmental Laws in all material respects;
(F) there are not any leaking underground
storage or treatment tanks, sumps, water, gas or oil
▇▇▇▇▇, or associated piping located at on or under
any of the Facility or the Facility Site;
(G) (1) there is no friable asbestos or urea
formaldehyde insulation contained in, forming any
part of, or contaminating any part of the Facility or
the Facility Site, and (2) no polychlorinated
biphenyls (PCBs) are used, stored, located at or
contaminate any part of the Facility or the Facility
Site; and
(H) no Lien has attached to the Facility by
reason of any Environmental Condition.
(v) Subsidiaries. The AEE Subsidiaries in existence on the
Closing Date are the sole subsidiaries of AEE. AEE owns 100% of the
membership interests of each such AEE Subsidiary.
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22
(w) No Brokers' Fees. Neither AEE nor any AEE Entity, nor any
Person acting on their behalf, has taken any actions the effect of
which would be to cause any party hereto to be liable for any brokers',
finders' or agents' fees or commissions or costs of any nature or kind
claimed by or on behalf of brokers, finders or agents in respect of the
Lease Financing except to the extent included in Transaction Expenses
or otherwise paid by AEE.
(x) Property. Each of AEE and the AEE Entities shall, upon
consummation of the transactions contemplated by the Asset Purchase
Agreement, have good and marketable title to and possession of, or a
good and valid leasehold interest in, the Assigned Assets (and AEE
shall have good and marketable fee simple title to the Facility Site)
free and clear of all Liens (except Permitted Liens), including all
intellectual property or rights to use intellectual property and other
rights required for the conduct of its respective business, but only to
the extent such intellectual property and other rights are required and
the failure to obtain such property could reasonably be expected to
result in a Material Adverse Effect. AEE is not a party to any contract
or agreement to sell any interest in the Facility other than pursuant
to the Operative Documents and the operative documents executed in
connection with the lease financings contemplated by the Other Leases.
(y) No Event of Loss. No Event of Loss has occurred, and, to
the Actual Knowledge of AEE, no event giving rise to an Event of Loss
is threatened, in each case with the respect to the Facility.
(z) Sales Taxes. Other than any Taxes included within
Transaction Expenses, all Taxes due and payable on the Closing Date in
connection with the sale of the Facility, the Lease of the Undivided
Interest and the Site Lease (and subsequent Site Sublease) of the
Facility Site, the issuance of the Lessor Notes and the Lease Financing
shall have been paid by or on behalf of AEE, and all filings,
reportings or other requirements with respect to such Taxes shall have
been satisfied by AEE. There are no ongoing use taxes applicable to the
foregoing except as set forth in the Base Case Projections.
(aa) Year 2000 Compliant. Each of AEE and the AEE Entities has
reviewed its operations with a view to assessing whether their business
or operations will, in the receipt, transmissions, processing,
manipulation, storage, retrieval, retransmission or other utilization
of data, be vulnerable to any significant risk that computer hardware,
software or any equipment containing embedded microchips used in their
business or operations will not in the case of dates or time periods
occurring after December 31, 1999 function at least as effectively as
in the
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case of dates or time periods occurring prior to January 1, 2000 (the
"Year 2000 Issue"). AEE has no reason to believe that the risks
associated with the Year 2000 Issue are reasonably likely to result in
a Material Adverse Effect.
Section 3.2 Representations and Warranties of the Owner Trust.
The Owner Trust represents and warrants to each of the other parties hereto
that, as of the Closing Date:
(a) Due Incorporation, etc. The Owner Trust is a business
trust duly organized, validly existing and in good standing under the
laws of the State of Delaware, has the power and authority to enter
into and perform its obligations under the Trust Agreement, this
Agreement and each of the other Operative Documents to which it is or
will be a party.
(b) Due Authorization, Enforceability, etc. (i)(A) The
execution, delivery and performance of the Trust Agreement has been
duly authorized by all necessary action of the Trustee and the Trust
Agreement has been duly executed and delivered by the Trustee in its
individual capacity and on behalf of the Owner Trust and (B) assuming
the due authorization, execution and delivery of the Trust Agreement by
the Owner Participant, the Trust Agreement constitutes the legal, valid
and binding obligation of the Trustee and the Owner Trust, enforceable
against the Trustee and Owner Trust, in each case in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, arrangement, moratorium or other
laws relating to or affecting the rights of creditors generally and by
general principles of equity.
(ii) (A) The execution, delivery and performance of
this Agreement has been duly authorized by all necessary
action, and this Agreement has been duly executed and
delivered by the Trustee on behalf of the Owner Trust and (B)
assuming the due authorization, execution and delivery of this
Agreement by each party hereto other than the Owner Trust,
this Agreement constitutes the legal, valid and binding
obligation of the Owner Trust, enforceable against the Owner
Trust in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, arrangement, moratorium or other laws relating
to or affecting the rights of creditors generally and by
general principles of equity.
(iii) (A) The execution, delivery and performance of
each of the other Operative Documents to which the Owner Trust
is or will be a party has been duly authorized by all
necessary action, and each of such other
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Operative Documents has been or will be duly executed and
delivered by the Trustee on behalf of the Owner Trust and (B)
assuming the due authorization, execution and delivery of each
of the other Operative Documents by each party thereto other
than the Owner Trust, each of the other Operative Documents to
which the Owner Trust is or will be a party constitutes or
when executed and delivered will constitute the legal, valid
and binding obligation of the Owner Trust, enforceable against
the Owner Trust in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, arrangement, moratorium or other
laws relating to or affecting the rights of creditors
generally and by general principles of equity.
(c) No Conflicts. The execution and delivery by the Owner
Trust of the Lease, this Agreement and the other Operative Documents to
which it is or will be a party, the consummation by the Owner Trust of
the transactions contemplated hereby and thereby, and the compliance by
the Owner Trust with the terms and provisions hereof and thereof, do
not and will not (i) contravene any Applicable Law of the United States
of America or the State of Delaware, or any provision of the Trust
Agreement or the organizational documents of the Owner Trust, or (ii)
contravene the provisions of, or constitute a default by the Owner
Trust under, or result in the creation of any Lessor's Lien upon the
Trust Estate under any indenture, mortgage or other material contract,
agreement or instrument to which the Owner Trust is a party or by which
the Owner Trust or its property is bound; provided, however, that no
representation is made with respect to the right, power or authority of
the Owner Trust to act as an operator of the Facility following a Lease
Event of Default.
(d) Governmental Actions. No authorization or approval or
other action by, and no notice to or filing or registration with, any
Governmental Entity is required for the due execution, delivery or
performance by the Trustee or the Owner Trust, as applicable, of the
Trust Agreement, this Agreement or the other Operative Documents to
which the Owner Trust is or will be a party, other than any such
authorization or approval or other action or notice or filing as has
been duly obtained, taken or given.
(e) Litigation. There is no pending or, to the Actual
Knowledge of the Owner Trust, threatened action, suit, investigation or
proceeding at law or in equity against the Owner Trust before any
Governmental Entity which, if determined adversely to it, would
materially adversely affect the ability of the Owner Trust to perform
its obligations under the Trust Agreement, this Agreement or the other
Operative Documents to which it is or will be a party or would
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25
materially adversely affect the Facility, the Facility Site or any
interest therein or part thereof or the security interest of the
Indenture Trustee in the Indenture Estate.
(f) Liens. The Trust Estate and the Mortgaged Property are
free of any Lessor's Liens attributable to the Owner Trust.
(g) Location of Chief Place of Business and Chief Executive
Office, etc. The chief executive office and principal place of business
of the Owner Trust, where the Owner Trust will keep its corporate
records concerning the Facility, the Facility Site and the Operative
Documents, is located at ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
Section 3.3 Representations and Warranties of the Owner
Participant. The Owner Participant represents and warrants to each of the other
parties hereto that, as of the Closing Date:
(a) Due Organization, etc. The Owner Participant is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite power and
authority to enter into and perform its obligations under this
Agreement, the Trust Agreement and the Tax Indemnity Agreement.
(b) Due Authorization, Enforceability, etc. The execution,
delivery and performance of this Agreement, the Trust Agreement and the
Tax Indemnity Agreement have been duly authorized by all necessary
action of the Owner Participant. This Agreement and each of the Trust
Agreement and the Tax Indemnity Agreement have been or will be duly
executed and delivered by the Owner Participant and assuming the due
authorization, execution and delivery by each other party hereto or
thereto, this Agreement, the Trust Agreement and the Tax Indemnity
Agreement constitute or when executed and delivered will constitute the
legal, valid and binding obligations of the Owner Participant,
enforceable against the Owner Participant in accordance with their
respective terms, except as the same may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, arrangement,
moratorium or other laws relating to or affecting the rights of
creditors generally and by general principles of equity.
(c) No Conflicts. The execution and delivery by the Owner
Participant of this Agreement, the Trust Agreement and the Tax
Indemnity Agreement, the consummation by the Owner Participant of the
transactions contemplated hereby and thereby, and the compliance by the
Owner Participant with the terms and
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26
provisions hereof and thereof, do not and will not conflict with any
Applicable Law binding on the Owner Participant which could reasonably
be expected to result in a Material Adverse Effect, or its
organizational documents or by-laws, or contravene the provisions of,
or constitute a default under, or result in the creation of any Owner
Participant's Lien upon the Trust Estate under any indenture, mortgage
or other material contract, agreement or instrument to which the Owner
Participant is a party or by which the Owner Participant or its
property is bound (it being understood that no representation or
warranty is being made as to any Applicable Laws relating to the
Facility or the Facility Site) or the use thereof or activity thereon
by AEE or any AEE Entity.
(d) Governmental Actions. No authorization or approval or
other action by, and no notice to or filing or registration with, any
Governmental Entity is required for the due execution, delivery or
performance by the Owner Participant of this Agreement, the Trust
Agreement or the Tax Indemnity Agreement, other than any authorization
or approval or other action or notice or filing as has been duly
obtained, taken or given (it being understood that no representation or
warranty is being made as to any Applicable Laws relating to the
Facility or the Facility Site or the use thereof or activity thereon by
AEE or any AEE Entity).
(e) Litigation. There is no pending or, to the Actual
Knowledge of the Owner Participant, threatened action, suit,
investigation or proceeding at law or in equity against the Owner
Participant before any Governmental Entity which, if determined
adversely to it, would materially adversely affect the Owner
Participant's ability to perform its obligations under this Agreement,
the Trust Agreement or the Tax Indemnity Agreement or would materially
adversely affect the Facility, the Facility Site or any interest
therein or part thereof or the Lien of the Indenture.
(f) Liens. The Trust Estate is free of any Owner Participant's
Liens.
(g) ERISA. No part of the funds to be used by the Owner
Participant to acquire the interests to be acquired by it under the
Trust Agreement or this Agreement constitutes assets of any Plan
subject to Part 4 of Subtitle B of Title I of ERISA or a plan or
individual retirement account subject to Section 4975(e) of the Code;
provided, that no representation is made as to the source of the funds
used to purchase the Pass Through Certificates.
(h) Acquisition for Investment. The Owner Participant is
purchasing the Beneficial Interest to be acquired by it for its own
account with no present
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27
intention of distributing such Beneficial Interest or any part thereof
in any manner which would require registration under the Securities
Act, but without prejudice, however, to the right of the Owner
Participant at all times to sell or otherwise dispose of all or any
part of such Beneficial Interest.
(i) Securities Act. Neither the Owner Participant nor any
Person authorized by it has directly or indirectly offered or sold any
interest in the Beneficial Interest, the Lessor Notes or the Pass
Through Certificates or any part thereof (or in any similar security or
lease, or in any security or lease the offering of which for the
purposes of the Securities Act would be deemed to be part of the same
offering as the offering of the Beneficial Interest, the Lessor Notes
or the Pass Through Certificates or any part thereof) or solicited any
offer to acquire any of the same, in violation of the registration
requirements of Section 5 of the Securities Act.
(j) Regulatory Status. Immediately prior to executing this
Agreement, the Owner Participant is not an "electric utility" or a
"public utility" or a "public utility holding company" under the
Federal Power Act or PUHCA.
Section 3.4 Representations and Warranties of the Lease
Indenture Company. The Lease Indenture Company hereby represents and warrants
that, as of the Closing Date:
(a) Due Organization, etc. The Lease Indenture Company is a
banking corporation duly organized, validly existing and in good
standing under the laws of the State of New York, has the power and
authority, as Indenture Trustee, to enter into and perform its
obligations under the Indenture, this Agreement and each of the other
Operative Documents to which it is or will be a party.
(b) Due Authorization; Enforceability, etc. (i)(A) The
execution, delivery and performance of this Agreement and the Indenture
have been duly authorized by all necessary action of the Lease
Indenture Company and this Agreement and the Indenture have been duly
executed and delivered by it and (B) assuming the due authorization,
execution and delivery of this Agreement and the Indenture by each
party hereto or thereto other than the Lease Indenture Company, this
Agreement and the Indenture each constitutes the legal, valid and
binding obligation of the Lease Indenture Company, enforceable against
the Lease Indenture Company in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, arrangement, moratorium or other laws relating to or
affecting the rights of creditors generally and by general principles
of equity.
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(ii) The execution, delivery and performance of each of
the other Operative Documents to which the Indenture Trustee
is or will be a party has been duly authorized by all
necessary action of the Indenture Trustee and each of such
other Operative Documents has been or will be duly executed
and delivered by the Indenture Trustee.
(c) No Conflicts. The execution and delivery by the Lease
Indenture Company, in its individual capacity or as Indenture Trustee,
as the case may be, of this Agreement and the other Operative Documents
to which it is or will be a party, the consummation by the Lease
Indenture Company, in its individual capacity or as Indenture Trustee,
as the case may be, of the transactions contemplated hereby and
thereby, and the compliance by the Lease Indenture Company, in its
individual capacity or as Indenture Trustee, as the case may be, with
the terms and provisions hereof and thereof, do not and will not
contravene any Applicable Law of the United States of America governing
the Lease Indenture Company or the banking or trust powers of the Lease
Indenture Company, or the Indenture, or its organizational documents or
by-laws, or contravene the provisions of, or constitute a default by
the Lease Indenture Company under, or result in the creation of any
Lien attributable to it upon the Indenture Estate or any indenture,
mortgage or other material contract, agreement or instrument to which
the Lease Indenture Company is a party or by which the Lease Indenture
Company or its property is bound; provided, however, that no
representation is made with respect to the right, power or authority of
the Lease Indenture Company or the Indenture Trustee to act as operator
of the Facility following a Lease Event of Default.
(d) Governmental Actions. No authorization or approval or
other action by, and no notice to or filing or registration with, any
Governmental Entity governing its banking or trust powers is required
for the due execution, delivery or performance by the Lease Indenture
Company or the Indenture Trustee, as the case may be, of this Agreement
or the other Operative Documents to which the Indenture Trustee is or
will be a party, other than any such authorization or approval or other
action or notice or filing as has been duly obtained, taken or given.
(e) Litigation. There is no pending or, to the Actual
Knowledge of the Lease Indenture Company, threatened action, suit,
investigation or proceeding at law or in equity against the Lease
Indenture Company, before any Governmental Entity which, if determined
adversely to it, would materially adversely affect the ability of the
Lease Indenture Company to perform its obligations under this Agreement
or the other Operative Documents to which it is or will be a party or
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would materially adversely affect the Facility, the Facility Site or
any interest therein or part thereof or the security interest of the
Indenture Trustee in the Indenture Estate.
Section 3.5 Representations and Warranties of Each Pass
Through Trustee. Each Pass Through Trustee hereby represents and warrants that,
as of the Closing Date:
(a) Due Organization, etc. Such Pass Through Trustee is a
banking corporation duly organized, validly existing and in good
standing under the laws of the State of New York, has the power and
authority, as Pass Through Trustee and/or in its individual capacity to
the extent expressly provided herein or in the applicable Pass Through
Trust Agreement, to enter into and perform its obligations under such
Pass Through Trust Agreement, this Agreement and each of the other
Operative Documents to which it is a party.
(b) Due Authorization; Enforceability; etc. (i) (A) The
execution, delivery and performance of this Agreement and the
applicable Pass Through Trust Agreement have been duly authorized by
all necessary action of such Pass Through Trustee and this Agreement
and the applicable Pass Through Trust Agreement have been duly executed
and delivered by it, and (B) assuming the due authorization, execution
and delivery of this Agreement and the applicable Pass Through Trust
Agreement by each party hereto other than such Pass Through Trustee,
each of this Agreement and the applicable Pass Through Trust Agreement
constitutes a legal, valid and binding obligation of such Pass Through
Trustee, enforceable against such Pass Through Trustee, in accordance
with its terms, except as the same may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, arrangement,
moratorium or other laws relating to or affecting the rights of
creditors generally and by general principles of equity.
(ii) The execution, delivery and performance of each of
the other Operative Documents to which such Pass Through
Trustee is or will be a party has been duly authorized by all
necessary action of such Pass Through Trustee and each of such
other Operative Documents has been or will be duly executed
and delivered by such Pass Through Trustee.
(c) No Conflicts. The execution and delivery by such Pass
Through Trustee of this Agreement and the other Operative Documents to
which it is or will be a party, the consummation by such Pass Through
Trustee of the transactions contemplated hereby and thereby, and the
compliance by such Pass Through Trustee with the terms and provisions
hereof and thereof, do not and will not contravene any Applicable Law
of the United States of America or the State of
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New York governing such Pass Through Trustee or the banking or trust
powers of such Pass Through Trustee, or the applicable Pass Through
Trust Agreement or its organizational documents or by-laws, or
contravene the provisions of, or constitute a default by such Pass
Through Trustee under, or result in the creation of any Lien
attributable to it upon the Certificates or any indenture, mortgage or
other material contract, agreement or instrument to which such Pass
Through Trustee is a party or by which such Pass Through Trustee or its
property is bound; provided, however, that no representation is made
with respect to the right, power or authority of such Pass Through
Trustee to act as operator of the Facility following a Lease Event of
Default.
(d) Governmental Actions. No authorization or approval or
other action by, and no notice to or filing or registration with, any
Governmental Entity governing its banking or trust powers is required
for the due execution, delivery or performance by such Pass Through
Trustee of this Agreement or the other Operative Documents to which
such Pass Through Trustee is or will be a party, other than any such
authorization or approval or other action or notice or filing as has
been duly obtained, taken or given.
(e) Litigation. There is no pending or, to the Actual
Knowledge of such Pass Through Trustee, threatened action, suit,
investigation or proceeding at law or in equity against such Pass
Through Trustee before any Governmental Entity which, if determined
adversely to it, would materially adversely affect the ability of such
Pass Through Trustee to perform its obligations under this Agreement or
the other Operative Documents to which it is a party or would
materially adversely affect the Facility, the Facility Site or any
interest therein or part thereof or the security interest of such Pass
Through Trustee in the Indenture Estate.
SECTION 4
CLOSING CONDITIONS
The obligations of the Owner Participant, the Owner Trust, the
Indenture Trustee, the Pass Through Trustees and AEE to consummate the
transactions contemplated hereby on the Closing Date shall be subject to the
satisfaction of the following conditions, except that the obligations of any
Person shall not be subject to such Person's (or any Affiliate of such Person's)
own performance or compliance.
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Section 4.1 Operative Documents. On or before the Closing
Date, each of the Operative Documents to be delivered at the Closing, in form
and substance satisfactory to the Owner Participant and AEE, shall have been
duly authorized, executed and delivered by the parties hereto and thereto, shall
each be in full force and effect, and executed counterparts of each shall have
been delivered to each of the parties hereto. No event or condition shall have
occurred that, with or without the lapse of time or the giving of notice, shall
give any of the parties hereto the right to terminate any of the Operative
Documents.
Section 4.2 Equity Investment. The Owner Participant shall
have made the Equity Investment to the Owner Trust at the place and in the
manner contemplated by Section 2.
Section 4.3 Certificates and Loan. The Certificate Purchase
Agreement in respect of the Pass Through Certificates shall have been entered
into and delivered by AEE and the Lead Underwriter and all conditions precedent
therein to the issuance of the Pass Through Certificates shall have been
satisfied or waived by the Initial Purchasers and such Initial Purchasers shall
have purchased the Certificates pursuant to and in accordance with the terms of
the Certificate Purchase Agreement and the Proceeds shall have been provided to
the Owner Trust through the purchase by the Pass Through Trustees of the
applicable Lessor Notes.
Section 4.4 Entity Documents. Each of the Transaction Parties
shall have received certified copies of the organizational documents, by-laws or
other governing documents of each of the other parties hereto and resolutions of
the board of directors or comparable governing body of each such other party
duly authorizing the Lease Financing and such documents and such evidence as
each party may reasonably request in order to establish the authority of each
such other party to consummate the transactions contemplated by this Agreement
and the Lease Financing, the taking of all requisite actions and other
proceedings in connection therewith and the receipt of all internal approvals,
including the satisfactory completion of all due diligence and receipt of all
required credit approval by the Owner Participant and compliance with the
conditions herein or therein set forth and the incumbency of all officers
signing any of the Operative Documents. Each of the foregoing documents shall be
reasonably satisfactory to the recipient.
Section 4.5 Representations and Warranties. The
representations and warranties set forth in Section 3 shall be true and correct
on and as of the Closing Date with the same effect as though made on and as of
the Closing Date and each of the Transaction Parties shall have received an
Officer's Certificate of each of the other parties hereto, dated the Closing
Date, to such effect.
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Section 4.6 Officer's Certificate Regarding Disclosure. The
Owner Participant and the Owner Trust shall have received an Officer's
Certificate of AEE, dated the Closing Date, in form, scope and substance
satisfactory to the Owner Participant and the Owner Trust confirming the truth
and accuracy of the information specified in such Officer's Certificate.
Section 4.7 No Lease Events of Default; Events of Loss;
Satisfaction of Conditions. No Lease Event of Default or Event of Loss or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default or an Event of Loss or other material damage to the
Facility or the other Assigned Assets shall have occurred and be continuing and
all conditions under all Operative Documents that are required to be satisfied
on the Closing Date shall have been either satisfied or waived.
Section 4.8 No Threatened Proceedings. No action, suit,
investigation or proceeding shall have been instituted nor shall any
governmental action be threatened before any Governmental Entity, nor shall any
order, judgment or decree have been issued or proposed to be issued by any
Governmental Entity as of the Closing Date, to set aside, restrain, enjoin or
prevent the consummation of the Operative Documents or the Lease Financing.
Section 4.9 Consents. All third party consents and filings
specified in the Asset Purchase Agreement necessary to consummate the Lease
Financing shall have been duly obtained and shall be in full force and effect
and in form and substance satisfactory to each of the Transaction Parties and
each such party shall have received a copy of each such consent and all
necessary filings shall have been made, including, but not limited to, the
filings referred to in Section 4.19.
Section 4.10 Governmental Actions. All actions, if any,
required to have been taken by any Governmental Entity on or prior to the
Closing Date in connection with the transactions contemplated by any Operative
Documents shall have been taken and all Governmental Approvals listed on
Schedule 3.1(d)(i) shall have been issued and shall be in full force and effect
on the Closing Date; and each of the Transaction Parties shall have received a
copy of each such Governmental Approval.
Section 4.11 Insurance. Insurance (including all related
endorsements) complying with the requirements of Section 11 of the Lease shall
be in full force and effect and all premiums thereon shall be current. The Owner
Participant, the Owner Trust, the Indenture Trustee and the Pass Through
Trustees shall each have received a certificate or certificates dated the
Closing Date of the Insurance Consultant stating that such insurance is in full
force and effect and shall be satisfactory in form and substance to the Owner
Participant and the Reviewing Insurance Consultant.
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Section 4.12 Engineering Report. The Owner Participant shall
have received a copy of the Engineering Report prepared by the Independent
Engineer, in form and substance satisfactory to the Owner Participant.
Section 4.13 Environmental Report. The Owner Participant and
the Owner Trust shall each have received a copy of the Environmental Report and
the Phase I and Phase II reports upon which the Environmental Report is based
and the report of the Environmental Consultant, which reports shall each be
satisfactory in form and substance to the Owner Participant and the Reviewing
Environmental Consultant and the Owner Participant shall be satisfied with the
environmental risk and indemnities associated with the Facility and the Facility
Site.
Section 4.14 Survey. The Owner Participant shall have received
a survey of the Facility Site in form satisfactory to the Owner Participant and
the Owner Participant shall be satisfied with the adequacy of the Facility Site
and any other lists of equipment and plans and drawings, as reasonably requested
by the Owner Participant.
Section 4.15 Appraisal; Condition of the Facility. The Owner
Participant shall have received the Closing Appraisal prepared by the Appraiser
and related tax opinion, each in form and substance satisfactory to the Owner
Participant, and the Owner Participant shall be satisfied that the Facility
shall be in the condition described in such Closing Appraisal. AEE shall have
received an appraisal from the Appraiser in form and substance satisfactory to
it and a copy of such appraisal shall be given to the Owner Participant.
Section 4.16 Market Report. The Owner Participant shall have
received a copy of the Market Report prepared by the Market Consultant, which
report shall be addressed to the Owner Participant and otherwise be satisfactory
in form and substance to the Owner Participant and the Reviewing Market
Consultant.
Section 4.17 Fuel Report. The Owner Participant shall have
received a copy of the Fuel Report prepared by the Fuel Consultant addressed to
the Owner Participant which shall be satisfactory in form and substance to the
Owner Participant.
Section 4.18 Opinions of Counsel. Each of the Transaction
Parties shall have received an opinion, dated the Closing Date, in form, scope
and substance satisfactory to such party, of the following counsel:
(a) ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel and special tax
counsel to AEE;
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(b) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, special counsel to AEE;
(c) Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special counsel to
the Owner Participant;
(d) Morris, James, Hitchens & ▇▇▇▇▇▇▇▇, special Delaware
counsel to the Owner Trust and the Trustee; and
(e) Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel to
the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustees, and the Depositary Agent.
Each such Person expressly consents to the rendering by its
counsel of the opinion referred to in this Section 4.18 and acknowledges that
such opinion shall be deemed to be rendered at the request and upon the
instructions of such Person.
Section 4.19 Recordings and Filings. All filings and
recordings listed on Schedule 4.19 hereto shall have been duly made and all
filing, recordation, transfer and other fees payable in connection therewith
shall have been paid; and the filing of all precautionary financing statements
under the Uniform Commercial Code of New York and any other documents as may be
reasonably requested by counsel to the Owner Participant, the Owner Trust, the
Indenture Trustee or the Pass Through Trustees to perfect the right, title and
interest of the Owner Trust in the Lessor's Interest or any part thereof or
interest therein, and the Lien of the Indenture, shall have been made.
Section 4.20 Funding of Accounts; Payment Undertaking. AEE
shall have funded the Rent Reserve Account with an amount equal to the Rent
Reserve Account Required Balance or shall have provided the Rent Reserve Payment
Undertaking Agreement in such amount, in form and substance satisfactory to the
Indenture Trustee and the Owner Trust, and shall have deposited into the
Additional Liquidity Account the Additional Liquidity Initial Deposit.
Section 4.21 Taxes. All Taxes (including any sales tax or
transfer tax), if any, due and payable on or before the Closing Date in
connection with the acquisition of the Assigned Assets, the execution, delivery,
recording and filing of any Operative Document, or any document or instrument
contemplated thereby and the Lease Financing shall have been duly paid in full.
Section 4.22 No Changes in Applicable Law. No change shall
have occurred in any Applicable Law that would make it illegal for the Owner
Participant or any Other Owner Participant, the Owner Trust, the Indenture
Trustee, the Pass Through
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Trustees, AEE, AEE 2 or AES NY3 to participate in or take any action
contemplated by the Lease Financing or which would otherwise subject the Owner
Participant or the Owner Trust to any public utility regulation of any
Governmental Entity or Applicable Law that in the reasonable opinion of the
Owner Participant is burdensome, or would subject its interest in the Lease to
any rate of return regulation by any Governmental Entity, in either case by
reason of the participation of the Owner Trust or such Owner Participant in the
Lease Financing.
Section 4.23 Registered Agent for AEE. CT Corporation System
shall have been appointed by AEE as registered agent for service of process in
the State of New York as provided in the Operative Documents and CT Corporation
System shall have accepted such appointment.
Section 4.24 Off-Balance Sheet Treatment. The net present
value of Basic Rent during the Lease Fixed Term discounted at the Lessee's
incremental borrowing rate shall satisfy the 90% test for off-balance sheet
treatment under FAS 13.
Section 4.25 Rent Adjustments. As to AEE, no rent adjustment
made or contemplated on the Closing Date (other than adjustments to reflect a
change in the actual interest rate on the Pass Through Certificates or a change
in the Closing Date) shall cause the net present value of Basic Rent on a
percentage basis discounted at the Discount Rate to increase by more than 100
basis points from the amount set forth in the Pricing Assumptions. As to the
Owner Participant, no rent adjustment made or contemplated on the Closing Date
shall cause a material adverse change in the projected Coverage Ratios from
those set forth in the Base Case Projections.
Section 4.26 Title Insurance. The Title Policies shall have
been delivered to AEE, the Owner Trust and the Indenture Trustee.
Section 4.27 Acquisition of Assigned Assets. AEE and/or the
Owner Trust and/or each Other Lessor and Related Lessor shall have acquired all
of the Assigned Assets. AES NY3 shall have acquired all of the capital stock of
Somerset Railroad.
Section 4.28 Credit Rating. The Pass Through Certificates
shall be rated at least Ba1 by ▇▇▇▇▇'▇ and BBB- by S&P.
Section 4.29 Working Capital Facility. AEE shall have entered
into the Working Capital Facility with the Working Capital Provider.
Section 4.30 Pro Forma Balance Sheet. AEE shall have delivered
an updated Pro Forma Balance Sheet to the Owner Participant, in form and
substance
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satisfactory to the Owner Participant, which Pro Forma Balance Sheet shall
demonstrate, among other things, that AEE has the financial capacity to
construct and pay for the SCR to be installed at the Facility.
Section 4.31 FERC Certification. All notices and related
filings (a) complying with the requirements of 18 C.F.R. Part 365 have been duly
filed with the FERC and (b) complying with the requirements of 17 C.F.R. Section
250.7(d) have been duly filed with the Securities and Exchange Commission; and
copies of all such notices and filings shall have been delivered to the Owner
Participant, the Owner Trust and the Indenture Trustee, and neither the FERC nor
the Securities and Exchange Commission shall have rescinded any of their
respective orders or otherwise imposed a burdensome requirement on the Owner
Participant, the Owner Trust or the Indenture Trustee.
Section 4.32 Vibration Agreement. AEE shall have entered into
an agreement, in form, scope and substance reasonably satisfactory to the Owner
Trust and the Owner Participant evidencing resolution of any issues relating to
the turbine vibrations observed in the number 9 bearing of the turbine-generator
at the Facility.
Section 4.33 Ash Disposal. Each of the New York Public Service
Commission and the New York Department of Environmental Conservation shall have
executed and delivered a Memorandum of Understanding in form and substance
satisfactory to the Owner Trust and the Owner Participant regarding the removal
and disposal of ash from the Facility and resolution of jurisdictional claims
between such agencies.
Section 4.34 Parent Guaranty. The Owner Participant shall have
caused its parent to execute and deliver to the other Transaction Parties an
Owner Participant Guaranty.
Section 4.35 Coal Hauling Agreement and Interconnection
Agreement. On or before the Closing Date, each of the Coal Hauling Agreement and
the Interconnection Agreement shall have been duly authorized, executed and
delivered by each of the parties thereto, shall be in full force and effect, and
executed counterparts of each shall have been delivered to each of the parties
hereto.
SECTION 5
AFFIRMATIVE COVENANTS OF AEE
AEE covenants and agrees with each of the other parties hereto
that:
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Section 5.1 Maintenance of Existence. Except as permitted by
Section 6.3, AEE will at all times, at its expense, do or cause to be done all
things necessary to preserve and keep in full force and effect its and each of
the AEE Entities' legal existence and qualification to do business in any state
in which the conduct of their respective business or ownership or leasing of
assets used in such business requires such qualification and where the failure
to be so qualified could reasonably be expected to result in a Material Adverse
Effect.
Section 5.2 Required Notices. AEE will provide the Owner
Participant, the Owner Trust and, so long as the Lien of the Indenture shall not
have been terminated or discharged, the Indenture Trustee and the Pass Through
Trustees prompt written notice of any of the following (i) the execution or
termination of any PPA (or a related series of PPAs with the same third party
purchaser) with a term in excess of 12 months, for the sale at a scheduled price
of more than 25% of the aggregate capacity and energy of the Facility, the
Related Facility and the Additional Facilities; (ii) the initiation, filing or
settlement of a significant litigation matter by or against any AEE Entity;
(iii) any anticipated change in its chief executive office, its principal place
of business, its name or the place where AEE maintains its business records
(which notice shall, in the event contemplated by this clause (iii), be provided
no later than 10 business days prior to such change); and (iv) immediately upon
obtaining Actual Knowledge of (a) any Lease Material Default, Lease Event of
Default, Event of Loss or other material damage to the Facility, the Related
Facility or either of the Additional Facilities; (b) any litigation, change in
its or any AEE Entity's business or financial condition or event of force
majeure, if it could reasonably be expected to result in a Material Adverse
Effect; (c) the existence of any Lessee Liens; (d) any labor strike that
directly affects AEE or AEE 2; and (e) the incurrence of any Permitted
Indebtedness in a principal amount in excess of $20 million.
Section 5.3 Delivery of Financial Statements; No Default
Certificate; Annual Operating Budget; Monthly Operations Report. (a) AEE shall
deliver to the Owner Participant, the Owner Trust and, so long as the Lien of
the Indenture shall not have been terminated or discharged, the Indenture
Trustee and the Pass Through Trustees, as soon as practicable after the end of
each fiscal year but in no event later than 120 days after the end of such year,
(i) a consolidated balance sheet of AEE and its Consolidated Subsidiaries as of
the end of such fiscal year and the related consolidated statements of income,
retained earnings and cash flows for such fiscal year (together with footnotes
thereto and a discussion and analysis), setting forth in each case in
comparative form the figures for the previous fiscal year, to the extent
available, all prepared in accordance with GAAP and reported on and audited by
an independent public accountant of nationally recognized standing, together
with any other information required to be filed with the Securities and Exchange
Commission in respect of the Pass Through Certificates under
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applicable securities laws, (ii) an Officer's Certificate of AEE stating that
(A) the signer has made, or caused to be made under its supervision, a review of
this Agreement and the other Operative Documents; and (B) such review has not
disclosed the existence during such fiscal year (and the signer does not have
knowledge of the existence as of the date of such certificate) of any condition
or event constituting a Lease Material Default or Lease Event of Default or an
Event of Loss or, if any such condition or event existed or exists, specifying
the nature thereof, the period of existence thereof and what action AEE has
taken or proposes to take with respect thereto, (iii) an Officer's Certificate
of AEE stating whether any change in Applicable Law has occurred during the
previous fiscal year that would result in a Material Adverse Effect and if such
Applicable Law has been enacted what action AEE has taken or proposes to take
with respect thereto including establishing a plan to implement such action
(which plan shall be reasonably satisfactory to the Owner Participant); AEE
shall update the Owner Participant annually on the implementation of such plan
(including any changes to such plan), (iv) a copy of FERC Form No. 1 to the
extent filed with FERC pursuant to 18 C.F.R. Section 141.1, and (v) a list of
Ineligible Transferees (it being the understanding of the parties that, if such
a list is not delivered in any fiscal year, the previous such list delivered
pursuant hereto shall apply for such fiscal year).
(b) AEE shall deliver to the Owner Participant, the Owner
Trust and, so long as the Lien of the Indenture shall not have been terminated
or discharged, the Indenture Trustee and the Pass Through Trustees, as soon as
reasonably practicable after the end of each fiscal quarter but in no event
later than 60 days after the end of such quarter (i) an unaudited consolidated
balance sheet of AEE and its Consolidated Subsidiaries as of the end of such
quarter and the related consolidated statements of income for such quarter and
for the portion of AEE's fiscal year ended at the end of such quarter, and the
related consolidated statements of cash flows for such quarter and for the
portion of the fiscal year ended at the end of such quarter, in each case
setting forth comparative figures for previous dates and periods, to the extent
available, and prepared in accordance with GAAP (subject to normal year-end
adjustments), and (ii) an Officer's Certificate of AEE stating that (A) the
signer has made, or caused to be made under its supervision, a review of this
Agreement and the other Operative Documents; and (B) such review has not
disclosed the existence during such fiscal quarter (and the signer does not have
knowledge of the existence as of the date of such certificate) of any condition
or event constituting a Lease Material Default or Lease Event of Default or an
Event of Loss or, if any such condition or event existed or exists, specifying
the nature thereof, the period of existence thereof and what action AEE has
taken or proposes to take with respect thereto.
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(c) AEE shall, at least 30 days prior to the commencement of
any fiscal year of AEE, provide to the Owner Participant and, upon the written
request, of a holder of a beneficial interest in the Pass Through Certificates
and subject to such holder entering into a confidentiality agreement covering
the matters set forth in Section 16.16, such holder the final Annual Operating
Budget for such fiscal year, together with confirmation by the Independent
Engineer that such budget is based on reasonable assumptions and is prepared in
accordance with Section 5.9 (including taking into account the applicable "AEE
Life Extension Forecast" described in the Engineering Report). The Annual
Operating Budgets shall be deemed Confidential Information for purposes of
Section 16.16. Such Annual Operating Budget shall include Pro Forma projections
and projections indicating updated projected Coverage Ratios (taking the
Independent Forecast into account for such rental period) through the end of the
Lease Term and shall indicate projected changes, if any, in the Rent Reserve
Account and the Additional Liquidity Account.
(d) AEE shall furnish to the Owner Participant and, subject to
a holder of a beneficial interest in the Pass Through Certificates entering into
a confidentiality agreement covering the matters set forth in Section 16.16,
such holder from time to time such information as it shall reasonably request
concerning the Facility and the Facility Site, including information concerning
the condition, operation, maintenance and use of the Facility and the Facility
Site and such other financial or operating information as it shall reasonably
request and which are routinely made available to creditors of AEE or AES, to
the extent AEE or AES possesses such information or can reasonably obtain such
information. To the extent such information consists of information contained in
records kept by AEE, AES or its Affiliates, such information shall be furnished
by AEE without cost to the recipient. Such information shall be deemed
Confidential Information for purposes of Section 16.16.
(e) For any period that AEE is subject to the periodic
reporting and informational requirements of the Exchange Act, AEE shall deliver
to the Owner Participant, the Owner Trust and, so long as the Lien of the
Indenture shall not have been terminated or discharged, the Indenture Trustee
and the Pass Through Trustees (for distribution to the Certificateholders),
copies of all such periodic reports and information required under the Exchange
Act and any other applicable securities laws within a reasonable period of time.
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(f) As soon as practicable following the end of each month,
AEE shall deliver to the Owner Participant and, upon the written request, of a
holder of a beneficial interest in the Pass Through Certificates and subject to
such holder entering into a confidentiality agreement covering the matters set
forth in Section 16.16, such holder a Monthly Operations Report for each of the
Facility and the Additional Facilities. AEE agrees to amend the Monthly
Operations Report to include such additional operation and maintenance
information as the Owner Participant may reasonably request. The Monthly
Operations Reports shall be deemed Confidential Information for purposes of
Section 16.16.
Section 5.4 Books and Accounts. AEE will keep proper books of
record and account adequate to reflect truly and fairly the financial condition
and results of operation of AEE (including of the Facility) and the AEE Entities
in which full, true, correct and complete entries in conformity with GAAP
consistently applied and all Applicable Laws shall be made of all dealings and
transactions in relation to its business and activities. AEE will create and
maintain its books, records, accounts and financial statements and those of the
AEE Entities separately from any of their other Affiliates and shall be
responsible for its own expenses and other liabilities. AEE shall, unless
otherwise directed by a court of competent jurisdiction, keep books of account
or records concerning the accounts, inventory, contract rights, equipment and
proceeds of AEE and the AEE Entities at its chief executive office and principal
place of business or such other address of which all other Transaction Parties
shall have received written notice.
Section 5.5 Compliance with Law. AEE shall, and shall cause
each of the AEE Entities to, comply in all material respects with Applicable
Laws including, without limitation, all Applicable Laws in respect of (a) the
conduct of its business as currently conducted and as proposed to be conducted
and the ownership, operation and use of its property (including those relating
to environmental standards and controls), (b) the production and sale of
electric energy, (c) the performance of its obligations under the Operative
Documents, and (d) ERISA and the regulations and published interpretations
thereunder, in each case except where such non-compliance is the subject of a
Permitted Contest.
Section 5.6 Maintain Licenses and Permits. AEE shall, and, as
applicable, shall cause each AEE Entity to, obtain and maintain all necessary
Governmental Approvals required to operate the Facility, the Related Facility
and the Additional Facilities and sell the energy and capacity therefrom at
wholesale (including all such licenses and approvals needed to maintain its
status as an "Exempt Wholesale Generator" pursuant to PUHCA) except where (a)
the failure to so obtain or maintain could not reasonably be expected to result
in a Material Adverse Effect, or (b) the Governmental Approvals, licenses,
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authorizations or permits are anticipated to be routinely granted at a later
date in the ordinary course.
Section 5.7 Pay Taxes. AEE shall, and shall cause each of the
AEE Subsidiaries to, before delinquency, file all required tax returns and pay
all taxes, assessments, and governmental charges or levies, lawfully imposed on
it or upon its income or profits due and payable prior to the date on which
penalties attach thereto. AEE shall have the right, however, to diligently
contest in good faith the validity or amount of any such tax by proper
proceedings timely instituted, and may permit the taxes so contested to remain
unpaid during the period of such contest if (a) AEE diligently prosecutes such
contest, (b) during the period of such contest, the enforcement of any contested
tax is effectively stayed, (c) AEE sets aside adequate cash reserves with
respect to the contested tax, (d) such contest is a Permitted Contest and (e)
such contest does not delay the ultimate imposition of the consequences of an
adverse determination beyond expiration of the Lease Term (without regard to any
further extensions or renewals thereof). AEE shall promptly pay or cause to be
paid any valid, final judgment enforcing any such tax, assessment, charge, levy
or claim and cause the same to be satisfied of record unless such judgment is
then being appealed and enforcement thereof is stayed pending appeal.
Section 5.8 Maintain AEE Subsidiaries; Insurance on Additional
Facilities. AEE shall take all actions required to cause each of the AEE
Subsidiaries (a) to remain as a wholly-owned subsidiary of AEE and (b)
collectively to operate and maintain (i) the Facility and each of the Additional
Facilities for so long as the Lease is in effect and (ii) the Related Facility
for so long as any Related Lease is in effect. AEE agrees to cause the
Additional Facilities to be insured (and subject to adjustments) to the same
extent as the Related Facility is required to be insured under the Related
Lease; any insurance proceeds thereof shall be paid to AEE for application in
repair or replacement of the affected property.
Section 5.9 Annual Operating Budget. AEE shall cause each of
the Facility, the Related Facility and the Additional Facilities to be operated
and maintained in accordance with the Annual Operating Budget and shall not
permit the aggregate expenditures in any year for Operating and Maintenance
Costs to exceed 125% of the amount set forth in the Annual Operating Budget.
Copies of the Annual Operating Budget for each calendar year shall be furnished
by AEE to the Independent Engineer at least 30 days before final adoption
thereof. Any amendment, modification or reallocation of the Annual Operating
Budget by AEE that would cause a change of more than 25% (positive or negative)
in the amounts set forth in the Annual Operating Budget, shall be accompanied by
confirmation of the Independent Engineer that such amendment, modification or
reallocation is based on reasonable assumptions. For purposes of this
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Section 5.9, fuel costs shall not be included in the calculation of the
percentage change (positive or negative) in the amounts specified in the Annual
Operating Budget.
Section 5.10 Further Assurances. AEE, at its own expense and
liability, shall cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances within its control as
may be necessary in order to carry out the intent and purposes of this
Participation Agreement and the other Operative Documents, and the transactions
contemplated hereby and thereby. AEE, at its own cost, expense and liability,
will cause such financing statements, fixture filings (and continuation
statements with respect thereto) and mortgage amendments as may be necessary and
such other documents as the Owner Trust, the Owner Participant and, so long as
the Lien of the Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees shall reasonably request to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary in
order to establish, preserve, protect and perfect the right, title and interest
of the Owner Trust in and to the Undivided Interest, the Ground Interest or the
Easements under the Site Lease, or any portion thereof or interest therein, and
the interest of the Mortgagee in the Mortgaged Property, and AEE will record or
cause to be recorded the Memorandum of Lease, the Memorandum of Site Lease and
the Memorandum of Site Sublease within 30 days after the Closing Date. AEE shall
promptly from time to time furnish to the Owner Trust, the Owner Participant,
or, so long as the Lien of the Indenture shall not have been terminated or
discharged, the Indenture Trustee or any Pass Through Trustee such information
with respect to the Facility, the Facility Site or the Lease Financing to which
AEE is a party or a recipient as may be required to enable the Owner Trust, the
Owner Participant, or, so long as the Lien of the Indenture shall not have been
terminated or discharged, the Indenture Trustee or any Pass Through Trustee, as
the case may be, to timely file with any Governmental Entity any reports and
obtain any licenses or permits required to be filed or obtained by the Owner
Trust under any Operative Document or the Owner Participant as the owner of the
Beneficial Interest.
Section 5.11 Public Utility Regulation. AEE agrees to
cooperate with the Owner Participant, the Owner Trust and the Indenture Trustee
and to take reasonable measures to alleviate the source or consequence of any
regulation constituting a Regulatory Event of Loss; provided, that AEE shall not
be required to take any action (other than any action that it otherwise is
required to take pursuant to the Operative Documents) which causes AEE to incur
any cost or expense not indemnified by such Person.
Section 5.12 Certain Tax Treatments. In filing all federal,
and to the extent applicable, state and local, income tax returns, AEE will
accrue Rent pursuant to
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and in accordance with Section 467(b)(1) of the Code except to the extent such
accrual is inconsistent with a Final Determination binding on AEE with respect
to this issue.
Section 5.13 Liens. AEE shall promptly notify the Owner Trust
and, so long as the Lien of the Indenture shall not have been terminated or
discharged, the Indenture Trustee of the imposition of any Lessee Lien, of which
the Lessee has Actual Knowledge and shall promptly, at its own expense, take
such action as may be necessary to fully discharge or release any such Lessee
Lien.
Section 5.14 Indenture. (a) AEE acknowledges receipt of a copy
of the Indenture, the Mortgage and the Assignment of Leases. In order to secure
the indebtedness evidenced by the Lessor Notes and the other obligations
referred to in and secured by the Indenture, the Mortgage and the Assignment of
Leases, the Owner Trust has provided in the Indenture, the Mortgage and the
Assignment of Leases, among other things, for the creation in favor of the
Indenture Trustee (for the benefit of the Noteholders) of a first mortgage lien
and first priority security interest in and assignment of the Indenture Estate
and for the assignment by the Owner Trust to the Indenture Trustee of all right,
title and interest of the Owner Trust in and to the Assigned Documents, to the
extent provided in the Indenture, the Mortgage and the Assignment of Leases.
(b) AEE agrees and consents:
(i) to the assignment to the Indenture Trustee
pursuant to the Indenture, the Mortgage and the Assignment of
Leases of the Lease and all Rents (other than Excepted
Payments) payable by AEE thereunder and (except as otherwise
provided in the Indenture and the Mortgage) all rights of the
Owner Trust thereunder;
(ii) that, without limiting any other provision of the
Operative Documents that expressly vests the same in the
Indenture Trustee for the benefit of the Certificateholders,
the Indenture Trustee shall have the right to exercise all
rights of the Owner Trust under the Lease (including without
limitation, the right to consent to the taking of any action,
the making of any determination or election or the granting of
any waiver, in each case by the Owner Trust thereunder) and
the right to receive notices given or required to be given to
the Owner Trust thereunder except, in each case, for Excepted
Rights and as otherwise provided in the Indenture and the
Mortgage;
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(iii) that all Rent (other than Excepted Payments) due
and to become due and payable by the Lessee under the Lease
has been assigned by the Owner Trust pursuant to the
Indenture, the Mortgage and the Assignment of Leases and that,
pursuant to such assignment, will be duly and promptly paid to
the Indenture Trustee when due by AEE without notice, demand,
counterclaim, setoff, deduction or defense, and without
abatement, suspension, deferment, diminution or reduction for
any reason whatsoever (including, without limitation, the
circumstances described in Section 9.1 of the Lease);
(iv) subject to the Indenture, the Mortgage and the
Assignment of Leases, and the Excepted Rights, that any
notice, consent, election, determination, waiver or other
action given or taken as to AEE by the Indenture Trustee as
assignee of the Owner Trust's rights under the Lease shall
have the same force and effect as a notice, consent, election,
determination, waiver or other action given or taken by the
Owner Trust under the Lease and that in the event of an
inconsistent notice, consent, election, determination, waiver
or other action given or taken from or by the Owner Trust and
from or by the Indenture Trustee, the notice, consent,
election, determination, waiver or other action given or taken
from or by the Indenture Trustee shall control;
(v) that the Indenture Trustee shall not, by reason of
the Indenture and the Mortgage or any other Operative
Document, be subject to any obligation, duty or liability
under the Lease, except (A) as provided in Section 4.12 of the
Indenture, (B) that when the Indenture Trustee is exercising
rights under the Lease it shall do so in accordance with the
terms and conditions thereof and (C) if the Indenture Trustee
has foreclosed on the Owner Trust (or exercised a comparable
remedy) and acquired the position of the Owner Trust under the
Lease; and
(vi) to all of the terms and conditions of the
Indenture, the Mortgage and the Assignment of Leases.
Section 5.15 Support Agreements. AEE agrees that, to the
extent that the rights described in the Support Agreements, which have already
been made available to the Owner Trust prior to the expiration or termination of
the Lease Term, are insufficient to permit on a commercially practicable basis,
during the period following the expiration or termination of the Lease Term, (a)
the location, occupation, interconnection, maintenance and repair of the
Facility, (b) the use, operation and possession of the Facility, (c) the
construction, use, operation, possession, maintenance, replacement,
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renewal and repair of all Modifications to the Facility, (d) appropriate ingress
to and egress from the Facility and the Facility Site for any reasonable purpose
in connection with the exercise of rights under the Operative Documents and such
Person's interest in the Undivided Interest or (e) the procurement of
transmission services from the Facility Site to enable such Person to deliver
the portion of the net electrical output of the Facility to the extent of the
Undivided Interest in a commercially efficient manner and on commercially
reasonable terms, AEE will arrange to provide the Owner Trust, promptly upon the
written request of the Owner Trust, with any services relating to the ownership
and operation of the Facility (to the extent AEE is capable of and remains in
the business of providing such services and such services cannot reasonably and
timely be obtained from third parties) necessary to permit the Owner Trust to
use the Facility as described in (a) through (e) above. Except as otherwise
provided in any Support Agreement, any such services provided by AEE will
provide for fair market value compensation to AEE (as determined by agreement
or, absent agreement, by an appraisal conducted according to the Appraisal
Procedure) and will terminate upon the expiration or termination of the Site
Lease, or will provide for some or all of such services to be earlier terminated
at the option of the Owner Trust. The cost of an appraisal conducted pursuant to
this Section shall be borne equally by the Owner Trust (and the Other Lessors)
and AEE.
Section 5.16 Notice of Payment of Supplemental Rent. AEE
agrees that if and when it shall be required to make any payment in respect of
Supplemental Rent pursuant to the Operative Documents, it shall provide along
with such payment a notice setting forth the reason for and amount of such
payment.
Section 5.17 Independent Forecast. AEE shall furnish or cause
to be furnished to the Owner Trust, the Owner Participant and, so long as the
Lien of the Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees no later than 30 days following
January 1, 2001 and biennially thereafter, a report (an "Independent Forecast")
prepared by a qualified independent consultant experienced in forecasting power
prices and coal prices, respectively (selected by AEE and reasonably acceptable
to the Owner Participant, provided that AEE shall notify the Owner Participant
of its selection of consultant and unless the Owner Participant shall object to
such selection by AEE within 10 Business Days of receipt of notice thereof, such
consultant shall be deemed acceptable by the Owner Participant), which sets
forth projections of (A) electricity prices (and the basis on which such prices
are to be applied (e.g., energy and capacity)) for the NYPP market applicable to
the Facility, the Related Facility and the Additional Facilities (or if such
market no longer exists in the form contemplated as of the Closing Date, any
successor market or substitute market as determined in good faith by AEE which
approximates, to the extent practicable, such region) and (B) coal prices on a
delivered basis to the Assigned Assets, in each case
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on at least an annual basis through the Lease Expiration Date. For purposes of
calculating the projected revenues and expenses under the Operative Documents,
AEE shall use (1) for electricity prices either (x) the electricity prices
forecast in the most recently furnished Independent Forecast, in each case,
during the relevant period of calculation, or (y) if and to the extent that
electricity sales during the relevant period of calculation are made pursuant to
one or more power sales agreements at prices other than prices which are by
their terms pool-based market prices, the electricity prices under such power
sales agreements and (2) for coal prices, either (x) to the extent that coal is
not purchased pursuant to one or more purchase agreements, the coal prices
forecasted in the most recently furnished Independent Forecast, in each case,
during the relevant period of calculation, or (y) if and to the extent that coal
purchases during the relevant period of calculation are made pursuant to one or
more purchase agreements, the coal prices under such coal purchase agreements.
Section 5.18 Legally Distinct Parcel. AEE shall take all
necessary actions within 12 months of the Closing Date to ensure that the
Facility Site shall constitute a legally distinct parcel or parcels that is (or
are) separately taxed and can be independently and validly conveyed, to the
extent that the foregoing is permitted under Applicable Law.
Section 5.19 Coal Hauling Agreement.. AEE shall comply with
all of the terms of the Coal Hauling Agreement applicable to it, the
non-performance of which could result in a Material Adverse Effect and shall
take all necessary actions to enforce the Coal Hauling Agreement in the event of
any non-compliance with any of the terms thereof by Somerset Railroad or AES
NY3, as the case may be.
Section 5.20 AEE Revenues. AEE shall, and shall cause each AEE
Subsidiary to, cause all AEE Revenues to be deposited directly into the Revenue
Account (except, to the extent provided in the Depositary Agreement, for any
revenues received by any AEE Entity under any Operation and Maintenance
Agreement).
Section 5.21 Maintenance of Payment Undertaking Agreements. So
long as the Lien of the Indenture shall not have been terminated or discharged,
AEE shall, to the extent commercially reasonable, maintain the portion of the
Rent Reserve Account Required Balance and the Special Rent Reserve Account
Required Balance that is to be applied to the payment of Basic Rent in the form
of a Payment Undertaking Agreement and shall replenish any amounts drawn
thereunder as soon as it is commercially reasonable to do so; provided, however,
that AEE shall be obligated to (a) maintain or replenish a Special Rent Reserve
Account Payment Undertaking Agreement only if such amount is more than
$15,000,000, (b) maintain a Rent Reserve Account Payment Undertaking Agreement
only if such amount is more than $5,000,000 and (c) replenish a Rent Reserve
Account Payment Undertaking Agreement only if such amount is more than
$1,000,000.
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Section 5.22 Assignment of Payment Undertakings. With the
exception of the Additional Liquidity Account, or amounts in respect of the
Additional Liquidity Required Balance, AEE shall assign its interest in any
Payment Undertaking Agreement to the Owner Trust for further assignment to the
Indenture Trustee.
SECTION 6
NEGATIVE COVENANTS OF AEE
AEE covenants and agrees with each of the parties hereto that:
Section 6.1 Incurrence of Indebtedness. AEE will not, and will
not permit any AEE Subsidiary to, create, incur, issue, assume, suffer to exist,
guarantee or otherwise become directly or indirectly liable with respect to any
Indebtedness except for Permitted Indebtedness. Any incurrence of Permitted
Indebtedness shall constitute a representation and warranty of AEE that all
conditions to such incurrence have been satisfied. For the avoidance of doubt,
the parties hereto agree that nothing in this Section 6.1 shall require AEE or
any AEE Subsidiary to discharge or otherwise prepay any Indebtedness properly
incurred at the time of issuance. Neither AES NY3 nor Somerset Railroad will
incur any Indebtedness without the prior written consent of the Owner
Participant except that no such written consent shall be required in respect of
(a) the Rail Credit Facility or (b) any operating leases in respect of Rail
Assets.
Section 6.2 Restricted Payments. (a) Notwithstanding any
provision to the contrary set forth in the Depositary Agreement, AEE will not
make any Distribution (and AEE will not permit any AEE Subsidiary to make any
Distribution other than to AEE or any other AEE Subsidiary) unless such
Distribution is made on or within 5 Business Days after a Rent Payment Date
(commencing with the Rent Payment Date occurring July 2, 2000 as specified in
clause (vii) below) and at the time of such Distribution the following
conditions are satisfied:
(i) all Rent, including Deferrable Payments, shall
have been paid to date;
(ii) amounts on deposit or deemed on deposit pursuant
to Section 3.1 of the Depositary Agreement in the Rent Reserve
Account, the Additional Liquidity Account and the Special Rent
Reserve Account shall be equal to or greater than the Rent
Reserve Account Required Balance, the Additional Liquidity
Required Balance or the Special Rent Reserve Account Required
Balance, as applicable;
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(iii) no Lease Material Default, Lease Event of Default
or event of default under any Permitted Indebtedness shall
have occurred and be then continuing;
(iv) no amounts shall be outstanding under the
Working Capital Facility;
(v) AEE has no indemnity currently due and payable
under Section 10 of the Participation Agreement or under any
other Operative Document or any obligation to fund the
Indemnity Account pursuant to Section 5.5(e) or Section 5.6 of
the Lease;
(vi) the Coverage Ratios for each of the two
semi-annual Rent Payment Periods immediately preceding such
Rent Payment Date (based on actual operating history) shall be
equal to or greater than the Required Coverage Ratio and the
Pro Forma Coverage Ratios for each of the four semi-annual
periods immediately succeeding such Rent Payment Date (based
on Pro Forma) shall be equal to or greater than the Required
Coverage Ratio;
(vii) notwithstanding the foregoing, the first Rent
Payment Date on which AEE shall be entitled to make a
Distribution shall be July 2, 2000; on such date for the
purpose of determining the satisfaction of the condition in
clause (vi) above, only the semi-annual period immediately
preceding such date shall be relevant;
(viii) with respect to the Rail Credit Facility, no event
of default shall have occurred and be then continuing
thereunder and the remaining term of the Rail Credit Facility
shall not be less than 30 days; and
(ix) AEE shall have delivered an Officer's Certificate
certifying that all conditions specified in this Section
6.2(a) have been satisfied.
(b) For purposes of Section 6.1 and this Section 6.2, all
calculations of Coverage Ratios shall be Pro Forma for any Permitted
Indebtedness, including the effects of such Permitted Indebtedness, and any
assets reasonably expected to be acquired in connection therewith and the
consummation of any related transactions.
(c) The making of a Distribution by AEE shall be deemed to be
a representation by AEE at the time of such transaction that the conditions
permitting such transaction shall have been satisfied.
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Section 6.3 Merger, Consolidation. (a) AEE will not, and will
not permit AES NY or any AEE Subsidiary, to consolidate or merge with or into
any other Person, unless AEE shall have provided 10 Business Days prior written
notice to the Owner Trust, the Owner Participant and, so long as the Lien of the
Indenture shall not have been terminated or discharged, the Indenture Trustee
and the Pass Through Trustees and immediately after giving effect to such
transaction:
(i) no Lease Material Default or Lease Event of
Default shall have occurred and be continuing;
(ii) the entity resulting from such consolidation or
surviving in such merger shall be (A) in the case of AEE, AEE
(B) in the case of AES NY, AES NY and (C) in the case of any
AEE Subsidiary, AEE or any such AEE Subsidiary;
(iii) the Rating Agencies shall have confirmed in
writing that, after giving effect to such merger or
consolidation, the credit rating of the Pass Through
Certificates shall not be less than (A) Baa2 by ▇▇▇▇▇'▇ and
BBB by S&P in the case of a consolidation or merger involving
AEE and (B) that rating then in effect in the case of a
consolidation or merger involving AES NY or any AEE
Subsidiary; and
(iv) AEE shall have delivered to the Owner Trust and,
so long as the Lien of the Indenture shall not have been
terminated or discharged, the Indenture Trustee a certificate
of a Responsible Officer of AEE certifying that the provisions
of this Section 6.3(a) have been complied with together with
such other documentation as the Owner Participant may
reasonably require to determine compliance with this Section
6.3.
(b) All costs and expenses of any transaction contemplated
under this Section 6.3 incurred by any Transaction Party shall be the
responsibility of AEE, payable on an After-Tax Basis.
(c) Except as otherwise expressly permitted under Section 6.9
(Assignment), or under Section 7.1 (Maintenance) or 19 (Lessee's Right to
Sublease) of the Lease, AEE shall not, and shall not permit AEE 2 or any other
AEE Subsidiary (i) to liquidate, wind up or dissolve or (ii) to transfer or
otherwise dispose of its property, assets or business or to purchase, lease or
acquire property or other assets, to or from any Person or Persons in one or a
series of transactions, except that in the case of clause (ii) the foregoing
shall not apply to any of the following: (A) any such transaction in the
ordinary course of business of AEE or any AEE Subsidiary, (B) any transfer or
other
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disposition of emission allowances or the Additional Land to a third party
purchaser, (C) any Permitted Affiliate Transaction and (D) subject to the prior
written consent of the Owner Participant and, so long as the Lien of the
Indenture shall not have been terminated or discharged, the Indenture Trustee,
the transfer or other disposition of the Related Facility (at any time when it
is owned by AEE or any Affiliate thereof, unless acquired by AEE or such
Affiliate as a result of an "Event of Loss" as defined in the Related Lease) or
either of the Additional Facilities.
Section 6.4 Limitation on Liens. AEE will not, and will not
permit any AEE Subsidiary to, create, incur, assume or suffer to exist any
Lessee Liens other than Permitted Liens.
Section 6.5 Limitations on Activities of AEE. AEE will not,
and will not permit any AEE Entity to, engage in any business other than the
lease, acquisition, ownership, operation, repowering or expansion of the
Assigned Assets and the capital stock of Somerset Railroad and the sale of
electricity or capacity generated by, and products derived from, and waste
generated by, the Facility (including emission allowances) and related
activities.
Section 6.6 Prohibited Transactions with Affiliates. (a) AEE
will not, and will not permit any AEE Subsidiary to, enter into any transactions
with an Affiliate, other than Permitted Affiliate Transactions, without the
prior written consent of the Owner Participant.
(b) Notwithstanding the foregoing, in the event any Rent
(including Deferrable Payments) then due is not paid or the Rent Reserve
Account, the Additional Liquidity Account or the Special Rent Reserve Account,
if applicable, is not fully funded or any Lease Material Default or Lease Event
of Default shall have occurred and be then continuing, the Owner Participant
shall have the right (but not the obligation) to appoint a qualified independent
consultant, at the expense of AEE, to review the terms (including pricing, terms
and conditions) of any or all of the Permitted Affiliate Transactions described
in clause (c) of the definition thereof. In the event that such consultant
determines that the Market Certification previously delivered with respect to
such Permitted Affiliate Transaction is no longer valid, at no price reduction,
cost or penalty to AEE, AEE shall cause such Permitted Affiliate Transaction to
be amended to reflect market terms (as such Consultant shall confirm).
Section 6.7 Limitations on Investments. AEE shall not make or
authorize any investments other than Permitted Investments as set forth in
Section 2.12 of the Depositary Agreement. AEE shall be permitted to direct the
investment of amounts in all
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Accounts in Permitted Investments so long as no Material Lease Default or Lease
Event of Default shall have occurred and be then continuing.
Section 6.8 No Abandonment. Except as contemplated by the
Lease, AEE shall not, and shall not permit any AEE Entity to, abandon or agree
to abandon the operation or maintenance of the Facility or otherwise cease to
diligently pursue the operation and maintenance of the Facility in accordance
with Prudent Industry Practice or voluntarily reduce the operations of the
Facility in any material respect (except to the extent required by customary
maintenance procedures) prior to the end of the Lease Term. Subject to the prior
written consent of the Owner Participant and, so long as the Lien of the
Indenture shall not have been terminated or discharged, the Indenture Trustee,
AEE shall not, and shall not permit any AEE Entity to, abandon or agree to
abandon the operation or maintenance of either of the Additional Facilities or
otherwise cease to diligently pursue the operation and maintenance of such
Additional Facilities in accordance with Prudent Industry Practice (except to
the extent required by customary maintenance procedures), during the expected
useful life of such Additional Facility.
Section 6.9 Assignment. (a) Except as set forth in clause (b)
hereof or Section 19 of the Lease, AEE may not Transfer the Lease or any other
Operative Document or any interests therein without the prior written consent of
the Owner Trust, the Owner Participant or, so long as the Lien of the Indenture
shall not have been terminated or discharged, the Indenture Trustee and the Pass
Through Trust Trustees (which may be withheld in each of their respective sole
discretion).
(b) AEE may, without the consent of the Owner Trust, the Owner
Participant, or, so long as the Lien of the Indenture shall not have been
terminated or discharged, the Indenture Trustee or any Pass Through Trustees,
Transfer the Lease and the other Operative Documents (in whole, but not in
part), but only in connection with a concurrent Transfer of all of AEE's assets
to a wholly-owned Affiliate of AES; provided, that such Affiliate is not a
tax-exempt entity within the meaning of Code Section 168(h)(2) and such
Affiliate is a "United States Person" within the meaning of Code Section
7701(a)(30); and provided, further, that, each of the Rating Agencies shall have
confirmed in writing that such Transfer shall not result in a downgrade of the
then existing credit rating of the Pass Through Certificates.
(i) Any Transfer under this clause (b) shall also be
subject to satisfaction of the following conditions:
(A) The Owner Trust, the Owner Participant
and, so long as the Lien of the Indenture shall not
have been terminated or discharged, the Indenture
Trustee and the Pass Through Trustees
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shall have received opinions satisfactory to such
recipients of an independent nationally recognized
counsel selected by AEE (at AEE's expense) prior to
the effectiveness of such Transfer, (1) to the effect
that all regulatory approvals required in connection
with such Transfer or necessary to assume AEE's
obligations under the Operative Documents shall have
been obtained, (2) as to the assignment and
assumption agreement referred to below and (3) as to
such other matters as any such party may reasonably
require;
(B) Such Transfer shall be pursuant to an
assignment and assumption agreement in form and
substance reasonably satisfactory to the Owner Trust,
Owner Participant and, so long as the Lien of the
Indenture shall not have been terminated or
discharged, the Indenture Trustee and Pass Through
Trustees;
(C) No Lease Material Default or Lease Event
of Default shall have occurred and be then
continuing;
(D) Such Transfer shall not cause the
regulation of the Owner Participant or the Owner
Trust as a public utility or public utility holding
company;
(E) Such Transfer shall not result in a
Regulatory Event of Loss;
(F) Whether or not such Transfer is
consummated, AEE shall pay all expenses of any such
Transfer including payment, on an After-Tax Basis, of
all reasonable documented out-of-pocket expenses of
the Owner Trust, the Trustee, the Owner Participant,
the Indenture Trustee and the Pass Through Trustees
incurred in connection with such Transfer;
(G) AEE shall give the Owner Trust, the
Owner Participant and, so long as the Lien of the
Indenture shall not have been terminated or
discharged, the Indenture Trustee and the Pass
Through Trustees 45 days prior written notice of any
such Transfer, specifying the name and address of the
proposed transferee and such additional information
as shall be necessary to determine whether the
proposed Transfer satisfies the requirements of this
Section 6.9;
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(H) Such Transfer shall not result in any
adverse regulatory consequences on the Facility, the
Undivided Interest or the Facility Site or otherwise
adversely affect the Owner Trust or the Owner
Participant or, so long as the Lien of the Indenture
shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustees;
(I) The Owner Trust, the Owner Participant
and, so long as the Lien of the Indenture shall not
have been terminated or discharged, the Indenture
Trustee and the Pass Through Trustees, each shall
have received a certificate executed by a Responsible
Officer of AEE that all of the conditions set forth
in this Section 6.9(b) have been satisfied; and
(J) AEE shall continue to remain secondarily
liable under the Lease and the other Operative
Documents.
Section 6.10 Coal Hauling Agreement. AEE will not modify,
amend or terminate the Coal Hauling Agreement without the prior written consent
of the Owner Trust, the Owner Participant and, so long as the Lien of the
Indenture shall not have been terminated or discharged, the Indenture Trustee.
Section 6.11 Interconnection Agreement. AEE will not modify,
amend or terminate the Interconnection Agreement (or any alternative arrangement
as permitted below) without the prior written consent of the Owner Participant,
provided that AEE shall have the right, without the consent of any party hereto,
to amend or terminate the Interconnection Agreement (or such alternate
arrangement), if (a) AEE delivers to the Owner Participant a certificate of the
Independent Engineer that alternate arrangements are in place to transmit power
to the grid, (b) that such alternate arrangements, considered in their entirety,
are no more expensive to AEE than the Interconnection Agreement and (c) it is
reasonable to expect that such alternate arrangements would continue to be
useable by the Lessor on substantially the same terms and conditions upon
expiration or termination of the Lease.
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SECTION 7
COVENANTS OF THE OWNER TRUST
Section 7.1 Covenants of the Owner Trust. The Owner Trust
hereby covenants and agrees with each of the Parties hereto that it will:
(a) comply with all of the terms of this Participation
Agreement applicable to it, the non-performance of which would
adversely affect AEE, the Trust Estate or the Indenture Estate; and
(b) not amend, supplement, or otherwise modify Section 2,
Section 6.06, Section 8, Section 9.01, Section 10.01, Section 10.02,
Section 11, Section 12.02, Section 12.04 or Section 12.11 of the Trust
Agreement without the prior written consent of AEE (so long as no Lease
Bankruptcy Default or Lease Event of Default shall have occurred and be
then continuing) and of the Indenture Trustee (so long as the Lien of
the Indenture shall not have been terminated or discharged).
Section 7.2 The Owner Trust covenants with each of the Parties
hereto that it will not directly or indirectly create, incur, assume or suffer
to exist any Lessor's Lien and will promptly notify AEE, the Owner Participant
and the Indenture Trustee of the imposition of any such Lessor's Lien of which
it has Actual Knowledge and shall promptly, at its own expense, take such action
as may be necessary to duly discharge such Lessor's Lien.
Section 7.3 The Owner Trust covenants with each of the Parties
hereto that it will not, unless such action is expressly contemplated by the
Operative Documents, (a) through its own action, terminate any Operative
Document to which it is a party, (b) amend, supplement, waive or modify (or
consent to any such amendment, supplement, waiver or modification of) any
Operative Document in any manner or (c) except as required in Section 2.10 of
the Indenture, take any action to prepay or refund the Lessor Notes or amend any
of the payment terms of the Lessor Notes without, in each case, the prior
written consent of AEE (so long as no Lease Event of Default shall have occurred
and be continuing) and, in the case of clause (a) or (b), the Indenture Trustee
(so long as the Lien of the Indenture shall not have been terminated or
discharged.)
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SECTION 8
COVENANTS OF THE OWNER PARTICIPANT
The Owner Participant covenants and agrees with each of the
Parties hereto that:
Section 8.1 Restrictions on Transfer of Beneficial Interest.
(a) The Owner Participant may Transfer all or any part of the Beneficial
Interest to (i) an Affiliate of the Owner Participant (provided that the Owner
Participant shall remain secondarily liable if such Affiliate does not meet the
net worth standard set forth in Section 8.1(a)(ii)(B), or (ii) subject to
Section 15.1 (Right of First Offer), to any other Person (an "Owner Participant
Transferee"), provided, however, that so long as no Lease Event of Default shall
have occurred and be then continuing:
(A) AEE shall have received an opinion of counsel, which
opinion and counsel are reasonably satisfactory to AEE, to the effect
that all regulatory approvals required in connection with such Transfer
or necessary for the Owner Participant Transferee to assume the Owner
Participant's obligations under the Operative Documents shall have been
obtained;
(B) the Owner Participant Transferee, or a guarantor thereof
under an Owner Participant Parent Guaranty, (1) shall have a tangible
net worth of at least $75,000,000, (2) shall be a United States person
within the meaning of Section 7701(a)(30) of the Code (unless AEE shall
have received an opinion of its tax counsel (in form, scope and
substance satisfactory to it) that such Transfer shall not result in
any material incremental adverse tax consequences to AEE), and (3)
shall have agreed to be bound by the terms of the Operative Documents
pursuant to an Assignment and Assumption Agreement; and
(C) so long as no Lease Bankruptcy Default shall have occurred
and be then continuing, neither the Owner Participant Transferee nor
any Affiliate thereof shall be an Ineligible Transferee.
(b) Unless the Owner Participant was a Competitor at the time
it became an Owner Participant in compliance with Section 8.1, if the Owner
Participant (or any Affiliate thereof) becomes a Competitor, then unless the
Owner Participant has transferred its Beneficial Interest to an Affiliate of the
Owner Participant (in the case where the Owner Participant becomes such a
Competitor) and has put in place sufficient policies and procedures (reasonably
satisfactory to AEE) to prevent the Owner Participant (or such Affiliate of the
Owner Participant that has become such a Competitor) from
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acquiring any confidential information relating to AEE, the Facility, the
Related Facility and the Additional Facilities, so long as no Lease Bankruptcy
Default or Lease Event of Default shall have occurred and be then continuing,
AEE shall have the right to purchase all (but not less than all) of the
Beneficial Interest and each other beneficial interest then held by the Owner
Participant in connection with any Other Lease or Related Lease, at any time
within six months after AEE obtains Actual Knowledge of such event. The purchase
price payable by AEE in connection with any such Transfer shall be an amount
equal to the greater of (i) the Equity Portion of Termination Value and (ii) (2)
the then current fair market value of the Beneficial Interest (assuming AEE is
in full compliance with the Lease).
(c) AEE shall not be responsible for any adverse tax
consequence to the Owner Trust or the Owner Participant resulting from any
Transfer pursuant to this Section 8.1 and the Pricing Assumptions shall not be
changed as a result of any such Transfer.
(d) The Owner Participant shall give the Owner Trust and AEE
and, so long as the Lien of the Indenture shall not have been terminated or
discharged, the Indenture Trustee (i) at least 30 days prior written notice of
such Transfer (except in the case of a Transfer to an Affiliate of the Owner
Participant), which notice need only state that the Owner Participant is
considering a Transfer of the Beneficial Interest, and (ii) a subsequent notice,
not less than 10 days prior to any such Transfer, specifying the name and
address of any proposed Owner Participant Transferee and such additional
information as shall be reasonably necessary to determine whether the proposed
Transfer satisfies the requirements of this Section 8.1. If requested by the
Owner Participant or the Indenture Trustee, AEE will acknowledge a qualifying
Transfer within 10 days of any request with respect thereto, provided that such
Transfer satisfies the requirement of this Section 8.1. All reasonable
out-of-pocket expenses of AEE and the other Transaction Parties (including
reasonable attorneys' fees and expenses) incurred in connection with any such
Transfer (or proposed Transfer), including any of the foregoing, relating to any
amendments to the Operative Documents required in connection therewith, shall be
paid by the Owner Participant; provided, however, that the Owner Participant
shall have no obligation to pay any expenses as a result of any Transfer while a
Lease Bankruptcy Default or Lease Event of Default is continuing, in which case
AEE shall be obligated to pay all such expenses.
(e) Upon any Transfer in compliance with this Section 8.1, (i)
the Owner Participant Transferee shall be deemed the "Owner Participant" for all
purposes, and shall enjoy the rights and privileges and perform the obligations
of the Owner Participant hereunder and under each other Operative Document to
which the Owner Participant is a party, and each reference in this Agreement and
each other Operative
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Document to the "Owner Participant" shall thereafter be deemed to include such
Owner Participant Transferee for all purposes and (ii) the transferor Owner
Participant shall be released from all obligations hereunder and under each
other Operative Document arising after such Transfer to the extent such
obligations are expressly assumed by such Owner Participant Transferee.
(f) The Owner Participant will not Transfer all or any part of
the Beneficial Interest unless the proposed transferee thereof first provides
the Owner Trust, the Indenture Trustee and AEE with both of the following:
(i) a written representation and covenant that no part
of the funds it uses to purchase, acquire or hold such
Beneficial Interest constitute assets of any Plan subject to
Part 4 of Subtitle B of Title I of ERISA or a plan or
individual retirement account subject to Section 4975(e) of
the Code; and
(ii) a written covenant that it will not transfer any
Beneficial Interest unless the subsequent transferee also
makes the representation described in clause (i) above and
agrees to comply with this Section 8.
(g) Notwithstanding the foregoing, no Transfer shall be
permitted hereunder if, after giving effect to such Transfer, there shall be
more than an aggregate of two unaffiliated owner participants holding beneficial
interests in the Trust Estate relating to the Lease and the trust estates
relating to the Other Leases and the Related Leases in which the Owner
Participant or its Affiliates hold a beneficial interest as of the Closing Date.
Section 8.2 Owner Participant's Liens. The Owner Participant
covenants that it will not, directly or indirectly, create, incur, assume or
suffer to exist any Owner Participant's Lien and the Owner Participant shall
promptly notify AEE and the Indenture Trustee of the imposition of any such
Owner Participant's Lien of which the Owner Participant has Actual Knowledge and
shall promptly, at its own expense, take such action as may be necessary to duly
discharge such Owner Participant's Lien; provided, however, that the Owner
Participant shall not be required to so discharge any such Owner Participant's
Lien while the same is being contested in good faith and by appropriate
proceedings pursuant to a Permitted Contest.
Section 8.3 Amendments or Revocation of Trust Agreement. The
Owner Participant covenants that it will not (a) amend, supplement, or otherwise
modify Section 2, 6.06, 8, 9.01, 10.01, 11, 12.02, 12.04 or 12.11 of the Trust
Agreement without the prior written consent of AEE (so long as no Lease
Bankruptcy Default or Lease Event
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of Default shall have occurred and be then continuing), and the Indenture
Trustee (so long as the Lien of the Indenture shall not have been terminated or
discharged), or (b) revoke, or otherwise waive compliance with or terminate the
Trust Agreement without the prior written consent of AEE (so long as no Lease
Bankruptcy Default or Lease Event of Default shall have occurred and be then
continuing), and the Indenture Trustee (so long as the Lien of the Indenture
shall not have been terminated or discharged).
Section 8.4 Instructions. The Owner Participant agrees that it
will not instruct the Trustee or the Owner Trust to take any action prohibited
by this Agreement or any other Operative Document.
Section 8.5 Appointment of Successor Trustee. Notwithstanding
any other provision of this Agreement, a successor Trustee shall not be
appointed without the consent of AEE, so long as no Lease Bankruptcy Default or
Lease Event of Default shall have occurred and be then continuing, and, so long
as the Lien of the Indenture shall not have been terminated or discharged, the
Indenture Trustee unless (a) such successor Trustee meets the requirements of
the Trust Agreement, (b) such successor Trustee has a combined capital and
surplus of at least $150 million, and (c) AEE and the Indenture Trustee shall
have received (i) an opinion or opinions of counsel, such counsel and such
opinions to be reasonably acceptable to such parties, to the effect that no
regulatory consents or approvals are required or (ii) such other evidence
thereof reasonably satisfactory to AEE and the Indenture Trustee, as the case
may be. The Owner Participant shall pay all expenses associated with obtaining
any opinion pursuant to clause (c) above; provided, however, that if the Trustee
resigns, is terminated for cause, or shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its
properties shall be appointed, or any public officer shall take charge of or
control the Trustee or its properties or affairs for the purpose of
rehabilitation, conservation or liquidation, in any such case, the opinion and
additional evidence required by clause (c) shall be at the sole expense of AEE.
Section 8.6 Certain Tax Treatments. In filing all federal and,
to the extent applicable, state and local, income tax returns, the Owner
Participant will accrue Rent pursuant to and in accordance with Section
467(b)(1) of the Code except to the extent such accrual is inconsistent with a
Final Determination binding on the Owner Participant with respect to this issue.
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SECTION 9
COVENANTS OF THE LEASE INDENTURE COMPANY
Section 9.1 Indenture Trustee's Liens. The Lease Indenture
Company covenants that it will not directly or indirectly create, incur, assume
or suffer to exist any Indenture Trustee's Lien and will promptly notify the
Owner Participant, the Owner Trust and AEE of the imposition of any such Lien of
which it has Actual Knowledge and shall promptly, at its own expense, take such
action as may be necessary to duly discharge such Indenture Trustee's Lien.
SECTION 10
INDEMNIFICATIONS
Section 10.1 General Indemnity.
(a) Claims Indemnified. Subject to the exclusions stated in
paragraph (b) below, AEE agrees, whether or not the Lease Financing is
consummated, to indemnify, protect, defend and hold harmless, and does hereby
indemnify the Owner Participant, the Owner Trust, the Trustee, the Trust
Company, the Indenture Trustee, the Lease Indenture Company, the Trust Estate,
the Pass Through Trustees and the Depositary Agent and their respective
Affiliates, successors, assigns, agents, directors, officers, managers, members
or employees (each an "Indemnitee") from and against any and all Claims incurred
or suffered by or asserted against any Indemnitee in any way relating to or
resulting from or arising out of or attributable to:
(i) the Facility or any part thereof, the
construction, financing, refinancing, acquisition, operation,
rebuilding, warranty, ownership, possession, maintenance,
repair, lease, condition, alteration, modification,
restoration, refurbishing, return, purchase, sale or other
disposition, insuring, sublease, or other use or non-use of
the Facility, the Facility Site, the Undivided Interest, the
Ground Interest, or any Component or any portion of any
thereof or any interest therein, the Related Facility, the
Related Site Lease, the undivided interests held by each Other
Lessor and Related Lessor, the Additional Facilities or the
other Assigned Assets;
(ii) the conduct of the business or affairs of AEE, or
any AEE Entity and the Facility, the Facility Site, the
Related Facility, the Related Facility Site, the Additional
Facilities, the respective sites of each of the
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Additional Facilities and any other business or affairs
conducted thereon or thereat, as applicable;
(iii) the manufacture, design, purchase, acceptance,
rejection, delivery or condition of or improvement to the
Facility, the Facility Site, the Undivided Interest, the
Ground Interest or any Component or any portion thereof or any
interest therein, the Related Facility, the Related Site
Lease, the undivided interests held by each Other Lessor and
Related Lessor, the Additional Facilities or the other
Assigned Assets;
(iv) the Lease, or any other Operative Document or any
Support Agreement, the execution or delivery thereof or the
performance, enforcement, attempted enforcement or amendment
of any terms thereof, or the transactions contemplated thereby
or resulting therefrom;
(v) the environmental condition at, related to or
caused by the operation or maintenance of the Facility and the
Facility Site;
(vi) the offer, issuance, sale, acquisition or delivery
of the Lessor Notes, any Additional Lessor Notes, the Pass
Through Certificates or any refinancing thereof;
(vii) the reasonable costs and expenses of the
Transaction Parties in connection with amendments or
supplements to the Operative Documents;
(viii) any violation by, or liability relating to, AEE or
any AEE Entity of, or under, any Applicable Law, whether now
or hereafter in effect (including Environmental Laws), or any
action of any Governmental Entity or other Person taken with
respect to the Facility, the Facility Site, the Undivided
Interest or the Ground Interest, the Related Facility, the
Related Site Lease, the undivided interests held by each Other
Lessor and Related Lessor, the Additional Facilities or the
other Assigned Assets, the Operative Documents or the
interests of the Owner Participant, the Owner Trust, the
Depositary Agent, the Indenture Trustee or the Pass Through
Trustees under the Operative Documents or the presence, use,
storage, transportation, treatment or manufacture of any
Hazardous Substance in, at, under or from the Facility or the
Facility Site;
(ix) the non-performance or breach by AEE or any AEE
Entity of any obligation contained in this Agreement or any
other Operative
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Document or the falsity or inaccuracy of any representation,
warranty or obligation of AEE or any AEE Entity contained in
this Agreement or any other Operative Document;
(x) the continuing fees (if any) and expenses of each
of the Trustee, the Depositary Agent, the Indenture Trustee,
and the Pass Through Trustees (including the reasonable
compensation and expenses of their respective counsel,
accountants and other professional persons) arising out of
each such parties discharge of its duties under or in
connection with the Operative Documents; and
(xi) in any other way relating to the Lease Financing
and the other lease financings contemplated by any Other Lease
or Related Lease.
(b) Claims Excluded. AEE shall not be required to indemnify
any Indemnitee under this Section 10.1 for any of the following:
(i) as to any Indemnitee, unless occurring in
connection with a Lease Event of Default and the exercise of
remedies in connection therewith, any Claim to the extent
attributable to acts taken, or omissions or events occurring,
arising or to be performed, after (A) the expiration or early
termination of the Lease and, where required by the Lease,
surrender to the Owner Trust or its successor of AEE's
interest in the Undivided Interest in compliance with the
provisions of the Lease (including, without limitation, the
requirements of Section 5.5 of the Lease) or (B) (other than
the Indenture Trustee, the Lease Indenture Company, the
Depositary Agent and the Pass Through Trustees) the purchase
of the Beneficial Interest by AEE in compliance with the
provisions of Section 14 or 15;
(ii) as to any Indemnitee, any Claim to the extent
attributable to any Transfer (voluntary or involuntary) by or
on behalf of such Indemnitee of any part of its interest under
any of the Operative Documents unless such Transfer is
required by the terms of the Operative Documents or occurs in
connection with a Lease Event of Default or the exercise of
remedies in connection therewith;
(iii) as to any Indemnitee, any Claim to the extent
arising from the gross negligence or willful misconduct of
such Indemnitee or a Related Party;
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(iv) as to any Indemnitee, any Claim to the extent
attributable to the noncompliance of such Indemnitee with any
of the terms of, or any misrepresentation or breach of any
warranty by such Indemnitee contained in any Operative
Document or any breach by such Indemnitee of any covenant
contained in any Operative Document unless attributable to (A)
any breach by AEE or any AEE Entity of any covenant,
representation or warranty contained in any Operative Document
or Support Agreements, (B) any breach by any other Transaction
Party of any covenant, representation or warranty made by it
in any Operative Document or (C) any breach by AES NY3 or
Somerset Railroad of any covenant, representation or warranty
made by it in the Coal Hauling Agreement;
(v) as to the Owner Trust, any Claim to the extent
attributable to a Lessor's Lien, as to the Indenture Trustee
and Lease Indenture Company, any Claim to the extent
attributable to an Indenture Trustee's Lien and, as to the
Owner Participant, any Claim to the extent attributable to an
Owner Participant's Lien;
(vi) any Claim relating to the payment of any amount
which constitutes Transaction Expenses which the Owner
Participant is obligated to pay pursuant to Section 2.3(a)
hereof or any other amount to the extent such Indemnitee has
expressly agreed in any Operative Document to pay such amount
without express right of reimbursement;
(vii) any Claim in respect of Taxes, other than a
payment necessary to make payments under this Section 10.1 on
an After-Tax Basis;
(viii) in the case of the Trustee, any failure on the
part of the Trustee to distribute in accordance with the Trust
Agreement any amounts indefeasibly received by it under the
Operative Documents and distributable by it thereunder;
(ix) any Claim that constitutes principal and/or
interest on the Lessor Notes or any Additional Lessor Notes;
(x) as to any Indemnitee, amendments to the Operative
Documents that are requested by such Indemnitee (and are not
requested or consented to by AEE or any Affiliate thereof) or
are not required by the Operative Documents or by Applicable
Law or in connection with a Lease Event of Default; and
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(xi) as to any Indemnitee, any Claim to the extent
arising out of or relating to an inspection of the Facility or
the Facility Site by or on behalf of such Indemnitee, unless
at the time of such inspection a Lease Event of Default shall
have occurred and be then continuing.
For purposes of this Section 10.1(b) the terms "omission,"
"gross negligence" and "willful misconduct," when applied with respect to any
Indemnitee, shall not include any liability to the extent imputed as a matter of
law to such Indemnitee by reason of such Person's interest in the Facility or
the Facility Site or such Indemnitee's failure to act in respect of matters
which are or were the obligation of AEE or another party under this Agreement or
any other Operative Document.
(c) Insured Claims. Subject to the provisions of Section
10.1(e), in the case of any Claim indemnified by AEE hereunder which is covered
by a policy of insurance maintained by AEE, each Indemnitee agrees, unless it
and each other Indemnitee shall waive its rights to indemnification (for itself
and each Related Party) in a manner reasonably acceptable to AEE and unless a
Lease Bankruptcy Default or Lease Event of Default shall have occurred and be
then continuing, to cooperate in a reasonable manner, at the sole expense of
AEE, with insurers in exercise of their rights to investigate, defend or
compromise such Claim.
(d) After-Tax Basis. AEE agrees that any payment or indemnity
pursuant to this Section 10.1 shall be made to the relevant Indemnitee on an
After-Tax Basis.
(e) Claims Procedure. (i) Each Indemnitee shall promptly after
such Indemnitee shall have Actual Knowledge thereof notify AEE of any Claim as
to which indemnification is sought; provided, however, that the failure so to
notify AEE shall not reduce or affect AEE's liability which it may have to such
Indemnitee under this Section 10.1.
(ii) Any amount payable to any Indemnitee pursuant to
this Section 10.1 shall be paid within 15 days after receipt
of such written demand therefor from such Indemnitee,
accompanied by a certificate of such Indemnitee stating in
reasonable detail the basis for the indemnification thereby
sought and (if such Indemnitee is not a party hereto) an
agreement to be bound by the terms hereof as if such
Indemnitee were such a party. The foregoing shall not,
however, constitute an obligation to disclose confidential
information of any kind.
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(iii) Promptly after AEE receives notification of such
Claim accompanied by a written statement describing in
reasonable detail the Claims which are the subject of and
basis for such indemnity and the computation of the amount so
payable, AEE shall notify such Indemnitee whether it intends
to pay, object to, compromise or defend any matter involving
the asserted liability of such Indemnitee.
(iv) AEE shall have the right to investigate and, so
long as no Lease Bankruptcy Default or Lease Event of Default
shall have occurred and be then continuing, AEE shall have the
right, in its sole discretion, to defend or compromise any
Claim for which indemnification is sought under this Section
10.1; provided, however, that AEE shall have acknowledged in
writing to the relevant Indemnitee its undertaking to
indemnify such Indemnitee pursuant hereto and; provided,
further, however, that such defense or compromise constitutes
a Permitted Contest. To the extent that other Claims unrelated
to the Lease Financing are part of the same proceeding
involving such Claim, AEE may assume responsibility for the
contest or compromise of such Claim only if the same may be
and is severed from such other Claims (and each Indemnitee
agrees to use reasonable efforts to obtain such a severance).
(v) If AEE elects, subject to the foregoing, to
compromise or defend any such asserted liability, it may do so
at its own expense and by counsel selected by it. Upon AEE's
election to compromise or defend such asserted liability and
prompt notification to such Indemnitee of its intent to do so,
such Indemnitee shall cooperate at AEE's expense with all
reasonable requests of AEE in connection therewith and will
provide AEE with all information not within the control of AEE
as is reasonably available to such Indemnitee which AEE may
reasonably request; provided, however, that such Indemnitee
shall not be obligated to disclose to AEE or any other Person,
or permit AEE or any other Person to examine (A) any income
tax returns or (B) any confidential information or pricing
information not generally accessible by the public (and, in
the event that any such information is made available, AEE
shall treat such information as confidential and shall take
all actions reasonably requested by such Indemnitee for
purposes of obtaining a stipulation from all parties to the
related proceeding providing for the confidential treatment of
such information from all such parties).
(vi) Subject to clause (e)(i) of this Section 10.1,
where AEE, or the insurers under a policy of insurance
maintained by AEE, undertake the
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defense of such Indemnitee with respect to a Claim (with
counsel reasonably satisfactory to such Indemnitee and without
reservation of rights against such Indemnitee), no additional
legal fees or expenses of such Indemnitee in connection with
the defense of such Claim shall be indemnified hereunder
unless such fees or expenses were incurred at the request of
AEE or such insurers. Notwithstanding the foregoing, an
Indemnitee may participate at its own expense in any judicial
proceeding controlled by AEE pursuant to the preceding
provisions; provided, however, that such party's participation
does not constitute a waiver of the indemnification provided
in this Section 10.1; provided, further, however, that if and
to the extent that (A) such Indemnitee is advised by counsel
that an actual or potential conflict of interest exists where
it is advisable for such Indemnitee to be represented by
separate counsel or (B) there is any risk that such Indemnitee
may be indicted or otherwise have any criminal liability
imposed on it and such Indemnitee informs AEE that such
Indemnitee desires to be represented by separate counsel, such
Indemnitee shall have the right to control its own defense of
such Claim and the reasonable fees and expenses of such
defense (including, without limitation, the reasonable fees
and expenses of such separate counsel) shall be borne by AEE.
(vii) So long as no Lease Bankruptcy Default or Lease
Event of Default shall have occurred and be continuing, no
Indemnitee shall enter into any settlement or other compromise
with respect to any Claim without the prior written consent of
AEE unless the Indemnitee waives its rights to indemnification
hereunder. Nothing contained in this Section 10.1(e) shall be
deemed to require an Indemnitee to contest any Claim or to
assume responsibility for or control of any judicial
proceeding with respect thereto.
(f) Subrogation. To the extent that a Claim indemnified by AEE
under this Section 10.1 is in fact paid in full by AEE or an insurer under an
insurance policy maintained by AEE, so long as no Lease Bankruptcy Default or
Lease Event of Default shall have occurred and be then continuing, AEE or such
insurer shall be subrogated to the rights and remedies of the Indemnitee on
whose behalf such Claim was paid to the extent of such payment (other than
rights of such Indemnitee under insurance policies maintained at its own
expense) with respect to the transaction or event giving rise to such Claim.
Should an Indemnitee receive any refund, in whole or in part, with respect to
any Claim paid by AEE hereunder, so long as no Lease Material Default or Lease
Event of Default shall have occurred and be then continuing, it shall promptly
pay over to AEE for deposit with the Depositary Agent in the Revenue Account the
lesser of (i) the amount refunded
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reduced by the amount of any Tax incurred by reason of the receipt or accrual of
such refund and increased by the amount of any Tax (but not in excess of the
amount of such reduction) saved as a result of such payment and (ii) the amount
AEE or any of its insurers has paid in respect of such Claim; provided, however,
that so long as any Lease Material Default or Lease Event of Default shall have
occurred and be then continuing, such amount may be held by the Owner Trust as
security for AEE's obligations under the Lease and the other Operative
Documents.
Section 10.2 General Tax Indemnity.
(a) Indemnity. Except as provided in paragraph (b), AEE agrees
to indemnify on an After-Tax Basis each of the Owner Participant, the Lessor,
the Owner Trust, the Trustee, the Trust Company, the Lease Indenture Company,
the Indenture Trustee, the Trust Estate, the Depositary Agent and the Pass
Through Trustees, their respective successors and assigns, and the Affiliates of
each of the foregoing (each a "Tax Indemnitee") and to hold each Tax Indemnitee
harmless from and defend against all Taxes that are imposed upon or with respect
to or borne by or asserted against any Tax Indemnitee, the Facility, the
Facility Site or any portion or Component thereof or any interest therein, or
upon any Operative Document or interest therein, or otherwise arising out of, in
connection with or relating to, any of the following:
(i) the construction, financing, refinancing,
acquisition, operation, warranty, ownership, possession,
maintenance, repair, lease, condition, alteration,
modification, restoration, refurbishing, return, purchase,
sale or other disposition, insuring, sublease, or other use or
non-use of the Facility or the Facility Site, or any portion
or Component thereof or any interest therein;
(ii) the manufacture, design, purchase, acceptance,
rejection, delivery, redelivery or condition of, or
improvement to, the Facility, the Facility Site, or any
portion or Component thereof, or any interest therein;
(iii) the Lease, the Site Lease, the Site Sublease or
any other Operative Document (or any document contemplated
thereby or therein) or any other Support Agreement, the
execution or delivery thereof, or the performance, enforcement
or amendment of any terms thereof;
(iv) the payment or receipt of Basic Rent and
Supplemental Rent or any other payment, receipt or earnings
under the Lease or arising from the Facility (or any portion
thereof or interest therein), the Facility Site (or any
portion thereof or interest therein), or with respect to the
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property held by the Trustee as part of the Trust Estate or by
the Indenture Trustee under the Trust Indenture or a Pass
Through Trustee under a Pass Through Trust Agreement; or
(v) otherwise relating to the transactions
contemplated by the Operative Documents.
(b) Excluded Taxes. The indemnity provided for in paragraph
(a) above shall not extend to any of the following Taxes (the "Excluded Taxes"):
(i) federal income Taxes imposed under Subtitle A of
the Code (including minimum taxes); provided, however, that
this exclusion shall not apply to the computation of the
gross-up amounts necessary to make a payment on an After-Tax
Basis;
(ii) Taxes, including franchise Taxes, imposed on,
based on or measured by gross or net income or receipts,
capital or net worth, excess profits, capital gain,
accumulated earnings, personal holding company, succession or
estate, preference, conduct of business or other similar Taxes
(including minimum taxes) (other than Taxes that are in the
nature of sales, use, rental, ad valorem, stamp, transfer,
excise, withholding, license, value added (to the extent such
taxes are not in lieu of an income tax) or property taxes)
("Income Taxes") imposed by (A) New York State (or any local
jurisdiction or taxing authority located therein), (B) any
foreign government or any foreign taxing authority, (C) a
taxing authority in any jurisdiction in which the Tax
Indemnitee is organized, incorporated or has its principal
place of business or is otherwise subject to Income Taxes as a
result of income, assets or activities that are unrelated to
the subject transaction, and (D) any other government or
taxing authority; provided, however, that the exclusion in
(b)(ii)(D) shall not apply to Income Taxes imposed as a result
of (w) the use, location, operation or registration of the
Facility in the jurisdiction imposing such tax, (x) the
execution or delivery of any Operative Document in such
jurisdiction, (y) the identity, organization, incorporation,
activities or presence of the Lessee or any Lessee Person or
(z) the making of any payment under the Operative Documents by
or on behalf of the Lessee or any related person;
(iii) Taxes imposed with respect to any period or event
occurring after expiration or earlier termination of the Lease
and surrender of the Facility to the Lessor in accordance with
the Lease (or, in the case of the Indenture Trustee, after the
repayment of the Lessor Notes) other than
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Taxes (A) relating to or arising from events occurring prior
to, or simultaneously with, the expiration or earlier
termination of the Lease or (B) imposed with respect to any
payments due under the Operative Documents;
(iv) Taxes imposed on a Tax Indemnitee to the extent
such Taxes result from (A) the gross negligence, willful
misconduct or fraud of such Tax Indemnitee or any Related
Party or (B) the breach or inaccuracy by such Tax Indemnitee
of any of its representations, warranties, covenants or
obligations under the Operative Documents, unless the breach
or inaccuracy is the direct result of a Lease Event of
Default;
(v) Taxes that would not be imposed had there not been
(A) any voluntary assignment, sale, transfer or other
disposition by the Owner Participant of any of its Beneficial
Interest, the Lessor of all or any of its interest in the
Facility or the Facility Site, the Indenture Trustee of any
interest in the Lessor Notes or the Indenture Estate, or any
interest in the Tax Indemnitee, unless such assignment, sale,
transfer or other disposition occurs pursuant to the exercise
of remedies during the continuance of a Lease Event of Default
or in connection with the exercise by Lessee of any right to
purchase the Undivided Interest, as permitted by the Operative
Documents; or (B) any involuntary assignment, sale, transfer
or other disposition by the Owner Participant of any of its
Beneficial Interest, the Lessor of all or any of its interest
in the Facility or the Facility Site, the Indenture Trustee of
any interest in the Lessor Notes or the Indenture Estate, or
any interest in the Tax Indemnitee resulting from a bankruptcy
or similar proceeding for relief of debtors in which any of
the foregoing is a debtor, or a foreclosure by a creditor of
any of the foregoing;
(vi) Taxes that would not occur but for an Owner
Participant's Liens or Owner Trust's Liens, unless a Lease
Event of Default shall have occurred and be then continuing;
(vii) Taxes imposed on any assignee or transferee of a
Tax Indemnitee (including any transfer by merger,
consolidation, liquidation, reorganization or otherwise by
operation of law) to the extent any such Taxes exceed the
Taxes that would have been imposed had no assignment or
transfer taken place (determined under the law as in effect on
the date of transfer); provided, however, that this exclusion
shall not apply to the computation of the gross-up amounts
necessary to make a payment on an After-Tax Basis, nor to a
transferee, assignee or successor in interest that
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acquires the interest of a Tax Indemnitee (A) pursuant to the
exercise of remedies by such Tax Indemnitee during the
continuance of a Lease Event of Default, (B) at Lessee's
request or direction or (C) during the year ending on the
first anniversary of the Closing Date;
(viii) Taxes that are included as a part of Transaction
Expenses; provided, however, that this exclusion shall not
apply to any increase in such Taxes imposed by any taxing
authority after the Closing Date;
(ix) Taxes imposed on, based on, or measured by any fee
for services performed by the Trustee, Indenture Trustee or
Pass Through Trustees in connection with the transactions
contemplated by the Operative Documents;
(x) with respect to the Owner Participant, Taxes for
which AEE is obligated to indemnify the Owner Participant
under the Tax Indemnity Agreement (or which are expressly
excluded from indemnification thereunder);
(xi) Taxes imposed on any Indemnitee that would not
have been imposed but for the Owner Trust being organized
outside the United States or being treated as other than (A) a
U.S. Person (as defined in Section 7701(a)(30) of the Code) or
(B) a grantor trust, disregarded entity or pass-through entity
for U.S., foreign, state or local income tax purposes;
(xii) Taxes that would not be imposed but for the
failure of a Tax Indemnitee to comply with certification,
information, documentation, reporting or other similar
requirements of the jurisdiction imposing such Taxes if (A)
such Tax Indemnitee was legally eligible to comply with such
requirement and such compliance is required by statute or
regulation of the jurisdiction imposing such Taxes as a
precondition to relief or exemption from such Taxes and (B)
such failure is not caused by the failure of the Lessee to
provide timely to such Tax Indemnitee any information or
document that the Lessee is required to provide pursuant to
the Operative Documents;
(xiii) Taxes imposed on a Tax Indemnitee where the Tax
Indemnitee's breach of its contest obligations adversely
affects AEE's ability to contest the Taxes (but only to the
extent of such adverse effect);
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(xiv) Taxes imposed on any Tax Indemnitee resulting from
an amendment, modification, supplement or waiver to any
Operative Document which was not requested by AEE and as to
which AEE is not a party and the Tax Indemnitee (or any
Related Party) is a party unless such amendment, modification,
supplement or waiver (A) is required by applicable law or the
Operative Documents, (B) may be necessary to, and is in
conformity with, any amendment to any Operative Document
requested or consented to by AEE in writing, or (C) is made
pursuant to the exercise of remedies by such Tax Indemnitee
while a Lease Event of Default shall have occurred and be
continuing;
(xv) Taxes imposed on a Tax Indemnitee as a result of
such Tax Indemnitee having engaged in a prohibited transaction
within the meaning of Section 4975 of the Code or under
subtitle B of Title I of ERISA;
(xvi) Taxes that are being contested in good faith
accordance with the terms of Section 10.2(g), but only so long
as AEE is complying with its obligations under Section
10.2(g);
(xvii) Taxes in the nature of an intangible or similar
tax, other than such Taxes imposed (A) by New York State or
any jurisdiction located therein or (B) as a result of the
organization or incorporation, or the location of the
principal place of business, of AEE or AES in the jurisdiction
imposing such Tax;
(xviii) Taxes imposed by any jurisdiction that would not
have been imposed on a Tax Indemnitee but for its activities
in such jurisdiction unrelated to the transactions
contemplated by the Operative Documents; and
(xix) value added Taxes imposed on a Tax Indemnitee to
the extent such value added Taxes are imposed in lieu of an
income tax.
(c) Payment. Each payment required to be made by AEE to a Tax
Indemnitee pursuant to this Section 10.2 shall be paid either (i) when due on or
prior to such due date directly to the applicable taxing authority by AEE if it
is permitted to do so, or (ii) in immediately available funds to such Tax
Indemnitee by the later of (A) 30 days following AEE's receipt of the Tax
Indemnitee's written demand for the payment (which demand shall be accompanied
by a statement of the Tax Indemnitee describing in reasonable detail the Taxes
for which the Tax Indemnitee is demanding indemnity and the computation of such
Taxes), (B) subject to paragraph (g) below, in the case of amounts
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which are being contested pursuant to such paragraph (g), at the time and in
accordance with a final determination of such contest or (C) in the case of any
indemnity demand for which AEE has requested review and determination pursuant
to paragraph (d) below, the completion of such review and determination;
provided, however, that with respect to a payment pursuant to clause (ii) in no
event shall any such payment be made to the Tax Indemnitee later than the date
which is three Business Days prior to the date on which such Taxes are required
to be paid to the applicable taxing authority. Within 30 days after the date of
each payment by AEE pursuant to clause (i) above, AEE shall furnish the Tax
Indemnitee with the original or a certified copy of a receipt for AEE Sections
payment of such Taxes or, if a receipt from the taxing authority is not obtained
within such 30 day period, or if such receipt includes references to other AEE
taxes unrelated to the transactions contemplated by this Agreement, such other
evidence of payment of such Taxes as is acceptable to the Tax Indemnitee.
Subject to the terms of Sections (e) and (f) below, as applicable, any amount
payable to AEE pursuant to paragraph (e) or (f) below shall be paid promptly
after the Tax Indemnitee realizes a Tax Benefit giving rise to a payment under
paragraph (e) or receives a refund or credit giving rise to a payment under
paragraph (f), as the case may be, and shall be accompanied by a statement of
the Tax Indemnitee computing in reasonable detail the amount of such payment.
Upon the final determination of any contest pursuant to paragraph (g) below in
respect of any Taxes for which AEE has made a Tax Advance (as defined in Section
10.2(g)(iii)(D)), the amount of AEE's obligation under paragraph (a) above shall
be determined as if such Tax Advance had not been made and any obligation of AEE
under this Section 10.2 and the Tax Indemnitee's obligation to repay the Tax
Advance shall be satisfied first by set off against each other, and any
difference owing by either party shall be paid within 10 days of such final
determination.
(d) Independent Examination. Within 15 days after AEE receives
any computation from the Tax Indemnitee, AEE may request in writing that an
independent public accounting firm (selected by the Tax Indemnitee and
reasonably acceptable to AEE) review and determine on a confidential basis the
amount of any indemnity payment by AEE to the Tax Indemnitee pursuant to this
Section 10.2 or any payment by a Tax Indemnitee to AEE pursuant to paragraph (e)
or (f) below. The Tax Indemnitee shall cooperate with such accounting firm and
supply it with all information reasonably necessary for the accounting firm to
conduct such review and determination; provided that such accounting firm shall
agree in writing in a manner satisfactory to the Tax Indemnitee to maintain the
confidentiality of such information. The parties hereto agree that the
independent public accounting firm's sole responsibility shall be to verify the
computation of any payment pursuant to this Section 10.2 and that matters of
interpretation of this Participation Agreement or any other Operative Document
are not within the scope of the independent accountant's responsibility. The
fees and disbursements of such accounting
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firm shall be paid by AEE; provided that such fees and disbursements shall be
paid by the Tax Indemnitee if the verification results in an adjustment in AEE's
favor of five percent or more of the indemnity payment or payments computed by
the Tax Indemnitee.
(e) Tax Benefit. If, as the result of any Taxes paid or
indemnified against by AEE under this Section 10.2, the aggregate Taxes actually
paid by the Tax Indemnitee for any taxable year and not subject to
indemnification pursuant to this Section 10.2 are less (whether by reason of a
deduction, credit, allocation or apportionment of income or otherwise) than the
amount of such Taxes that otherwise would have been payable by such Tax
Indemnitee (a "Tax Benefit"), then to the extent such Tax Benefit was not taken
into account in determining the amount of indemnification payable by AEE under
paragraph (a) above and provided no Lease Material Default or Lease Event of
Default shall have occurred and be continuing (in which event the payment
provided under this Section 10.2(e) shall be deferred until the Lease Material
Default or Lease Event of Default has been cured), such Tax Indemnitee shall pay
to AEE the lesser of (A)(y) the amount of such Tax Benefit, plus (z) an amount
equal to any federal, state or local income tax benefit resulting to the Tax
Indemnitee from the payment under clause (y) above and this clause (z)
(determined using the same assumptions as set forth in the second sentence under
the definition of After-Tax Basis) and (B) the amount of the indemnity paid
pursuant to this Section 10.2 giving rise to such Tax Benefit; provided, that,
in either case, the Tax Indemnitee may offset any amount due under this Section
10.2(e) against payments or indemnitees then due by AEE pursuant to the
Operative Documents. If it is subsequently determined that the Tax Indemnitee
was not entitled to such Tax Benefit, the portion of such Tax Benefit that is
repaid or recaptured shall be treated as Taxes for which AEE must indemnify the
Tax Indemnitee pursuant to this Section 10.2, without regard to Sections
10.2(b).
(f) Refund. If a Tax Indemnitee obtains a refund or credit of
all or part of any Taxes paid, reimbursed or advanced by AEE pursuant to this
Section 10.2, the Tax Indemnitee promptly shall pay to AEE (x) the amount of
such refund or credit plus (y) an amount equal to any federal, state or local
income tax benefit realized by such Tax Indemnitee by reason of such payment to
AEE (determined using the same assumptions as set forth in the second sentence
under the definition of After-Tax Basis); provided, however, that (A) if at the
time such payment is due to AEE a Lease Material Default or Lease Event of
Default shall have occurred and be then continuing, such amount shall not be
payable until such Lease Material Default or Lease Event of Default has been
cured and (B) the amount payable to AEE pursuant to this sentence shall not
exceed the amount of the indemnity payment in respect of such refunded or
credited Taxes that was made by AEE; provided, further, that the Tax Indemnitee
may offset any amount due under this Section 10.2(f) against payments or
indemnitees then due by AEE pursuant to the
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Operative Documents. If it is subsequently determined that the Tax Indemnitee
was not entitled to such refund or credit, the portion of such refund or credit
that is repaid or recaptured shall be treated as Taxes for which AEE must
indemnify the Tax Indemnitee pursuant to this Section 10.2, without regard to
Sections 10.2 (b). If, in connection with a refund or credit of all or part of
any Taxes paid, reimbursed or advanced by AEE pursuant to this Section 10.2, a
Tax Indemnitee receives or is credited with an amount representing interest on
such refund or credit, the Tax Indemnitee promptly shall pay to AEE the amount
of such interest that shall be fairly attributable to such Taxes paid,
reimbursed or advanced by AEE prior to the receipt of such refund or credit
(less any Taxes paid or accrued with respect to the receipt of such amounts).
(g) Contest.
(i) Notice of Contest. If a written claim for payment
is made by any taxing authority against a Tax Indemnitee for
any Taxes with respect to which AEE may be liable for
indemnity hereunder (a "Tax Claim"), such Tax Indemnitee shall
give AEE written notice of such Tax Claim as soon as
practicable after its receipt, and shall furnish AEE with
copies of such Tax Claim and all other writings received from
the taxing authority to the extent relating to such claim;
provided that failure to so notify AEE shall not relieve AEE
of any obligation to indemnify the Tax Indemnitee hereunder
except as provided in clause (xiii) of Section 10.2(b). After
giving of such notice, so long as no Lease Material Default or
Lease Event of Default shall have occurred and be then
continuing, the Tax Indemnitee shall not pay such Tax Claim
until at least 30 days after providing AEE with such written
notice, unless required to do so by law or regulation.
(ii) Control of Contest. Subject to subsection (g)(iii)
below, AEE shall be entitled to contest at its own expense
(acting through counsel selected by AEE and reasonably
satisfactory to the Tax Indemnitee), and control the contest
of, any Tax Claim if (i) such Tax Claim may be segregated
procedurally from tax claims for which AEE is not obligated to
indemnify the Tax Indemnitee or (ii) the Tax Indemnitee
requests that AEE control such contest; provided that in the
case of any such contest pursuant to (i) or (ii) AEE shall use
all reasonable efforts to contest such Tax Claim in its own
name, but if such contest is in the Tax Indemnitee Sections
name, the Tax Indemnitee shall have the right to participate
in all proceedings. In the case of all other Tax Claims, (A)
unless, in the opinion of counsel selected by Tax Indemnitee
and reasonably satisfactory to AEE (but delivered at AEE's
expense) there is no Reasonable Basis to contest or (B) the
matter at
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issue was subject to a prior unsuccessful contest (unless AEE
shall have previously delivered an opinion of counsel selected
by Tax Indemnitee and reasonably satisfactory to AEE that
there has been a change in law which would affect the outcome
of a new contest in favor of Tax Indemnitee), if AEE shall
request that the Tax be contested (in accordance with
subsection (g)(iii) below)), the Tax Indemnitee shall contest
the Tax Claim and the following rules shall apply with respect
to such contest:
(A) the Tax Indemnitee shall control the
contest of such Tax Claim in good faith (acting
through counsel selected by the Tax Indemnitee and
reasonably satisfactory to AEE),
(B) at AEE's written request, if payment is
made to the applicable taxing authority, the Tax
Indemnitee shall use all reasonable efforts to obtain
a refund thereof in appropriate administrative or
judicial proceedings,
(C) the Tax Indemnitee shall consult with
and keep reasonably informed AEE and its designated
counsel with respect to such Tax Claim, shall use
commercially reasonable efforts to allow AEE to
review any written submission to be made to a taxing
authority or a court to the extent that such
submission relates to the contest and shall consider
and consult in good faith with AEE concerning (i) any
suggestions made with respect to such submission or
(ii) any request by AEE to (a) resist payment of
Taxes demanded by the taxing authority in connection
with such Tax Claim if practical and (b) not pay such
Taxes except under protest if protest is necessary
and proper,
(D) Tax Indemnitee shall, if requested by
Lessee in a timely written request, seek judicial
review of any adverse administrative determination
and, upon receipt of an opinion from independent tax
counsel selected by Tax Indemnitee and reasonably
acceptable to Lessee (delivered at Lessee's expense)
that it is more likely than not that an adverse
judicial determination will be reversed or
substantially modified upon appeal in a manner
favorable to Tax Indemnitee, appeal such adverse
judicial determination, and
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(E) the Tax Indemnitee shall not otherwise
settle, compromise or abandon such contest without
AEE's prior written consent except as provided in
paragraph (g)(iv) below.
(iii) Conditions of Contest. Notwithstanding the
foregoing, no contest with respect to a Tax Claim shall be
required or permitted pursuant to this Section 10.2, and AEE
shall be required to pay the applicable Taxes without contest,
unless:
(A) within 30 days after notice by the Tax
Indemnitee to AEE of such Tax Claim, AEE requests in
writing that such Tax Claim be contested; provided
that if a shorter period is required for taking
action with respect to such Tax Claim and the Tax
Indemnitee notifies AEE of such requirement, AEE
requests such contest within such shorter period,
(B) no Lease Bankruptcy Default or Lease
Event of Default shall have occurred and be then
continuing,
(C) in cases of Tax Claims to be contested
by the Tax Indemnitee only, the amount of the
potential indemnity that would be payable under this
Section 10.2 in respect of the matter in controversy
(which shall include any prospective exposure in
future tax years attributable to the position being
challenged as well as any similarly and logically
related adjustments in respect of the transactions
contemplated by the Operative Documents) shall exceed
$25,000,
(D) if such contest involves payment of such
Tax, AEE either advances to the Tax Indemnitee on an
interest-free basis and with no after tax cost to
such Tax Indemnitee (a "Tax Advance"), or pays such
Tax Indemnitee, the amount payable by AEE pursuant to
Section 10.2(a) above with respect to such Tax,
(E) AEE agrees to pay (and pays on demand)
and with no after tax cost to such Tax Indemnitee all
reasonable costs and expenses incurred by the Tax
Indemnitee in connection with the contest of such
claim (including, without limitation, reasonable
legal, accounting and investigatory fees,
disbursements, penalties, interest and additions to
Tax),
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(F) AEE acknowledges in writing its
responsibility to indemnify such Tax Indemnitee in
respect of the matter at issue; provided, that such
acknowledgment of liability will not be binding if
the contest is resolved on a basis from which it can
clearly and unambiguously be determined that AEE
would not have been liable to Tax Indemnitee in the
absence of such acknowledgment of liability, and
(G) Tax Indemnitee determines in good faith
that there is no material risk that action taken will
result in sale, forfeiture of, or creation of Lien
on, the Facility, the Undivided Interest, or any
portion thereof (unless AEE has provided to the Tax
Indemnitee a bond or other sufficient protection
against the foregoing risks reasonably satisfactory
to the Tax Indemnitee).
(iv) Waiver of Indemnification. Notwithstanding
anything to the contrary contained in this Section 10.2, the
Tax Indemnitee at any time may elect to decline to take any
action or any further action with respect to a Tax Claim and
may in its sole discretion settle or compromise any contest
with respect to such Tax Claim without AEE's consent if the
Tax Indemnitee:
(A) waives its right to any indemnity
payment by AEE pursuant to this Section 10.2 in
respect of such Tax Claim (and any other claim for
Taxes with respect to any other taxable year the
contest of which is effectively precluded by the Tax
Indemnitee's declination to take action with respect
to the Tax Claim), and
(B) promptly repays to AEE any Tax Advance
and any amount paid to such Tax Indemnitee under
Section 10.2(a) above in respect of such Taxes, but
not any costs or expenses with respect to any such
contest.
Except as provided in the preceding sentence, any such waiver
shall be without prejudice to the rights of the Tax Indemnitee with respect to
any other Tax claim.
(h) Reports.
(i) If any report, statement or return is required to
be filed by a Tax Indemnitee with respect to any Tax that is
subject to indemnification under this Section 10.2, AEE shall
(1) notify the Tax Indemnitee in writing
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of such requirement not later than 30 days prior to the date
such report, statement or return is required to be filed
(determined without regard to extensions) and (2) either (y)
if permitted by applicable law, prepare such report, statement
or return for filing, send a copy of such report, statement or
return to the Tax Indemnitee and timely file such report,
statement or return with the appropriate taxing authority, or
(z) if AEE is not permitted by law to file such report,
statement or return, or if so directed by the Tax Indemnitee,
prepare and furnish to such Tax Indemnitee not later than 30
days prior to the date such report, statement or return is
required to be filed (determined without regard to extensions)
a proposed form of such report, statement or return for filing
by the Tax Indemnitee; provided, however, that if such report,
statement or return requires information particularly within
the control of the Tax Indemnitee that is not provided to AEE
within a reasonable amount of time of AEE Sections request,
AEE shall prepare (and furnish to Tax Indemnitee within the
time frame discussed above) a draft of such report, statement
or return by completing those portions of such report,
statement or return which can completed based upon the
information then available to AEE.
(ii) Each of the Tax Indemnitee or AEE, as the case may
be, shall timely provide the other, at AEE's expense, with all
information in its possession that the other party may
reasonably require and request to satisfy its obligations
under this paragraph (h).
(i) Non-Parties. If a Tax Indemnitee is not a party to this
Agreement, AEE may require such Tax Indemnitee to agree in writing, in a form
reasonably acceptable to AEE, to the terms of this Section 10 prior to making
any payment to such Tax Indemnitee under this Section.
SECTION 11
AEE RIGHT OF QUIET ENJOYMENT
Each party to this Agreement acknowledges notice of, and
consents in all respects to, the terms of the Lease and the Site Sublease and
expressly, severally and as to its own actions only, agrees that, so long as no
Lease Event of Default shall have occurred and be then continuing and the Lease
has not been declared (or deemed declared) in default, it shall not take or
cause to be taken any action contrary to AEE's rights under the Lease and the
Site Sublease, including the right to quiet enjoyment of the use, operation and
possession by AEE of the Facility and the Undivided Interest and the Ground
Interest.
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SECTION 12
SUPPLEMENTAL FINANCING
Section 12.1 Financing Modifications. Upon the request of AEE
delivered to the Indenture Trustee at least 120 days prior to the proposed
financing of the Lessor's Percentage of the cost of any Nonseverable
Modification or Required Modification to the Facility, the Owner Trust, the
Owner Participant and the Indenture Trustee agree to cooperate with AEE to (1)
issue Additional Lessor Notes under the Indenture to finance such Modification
which will rank pari passu with the Lessor Notes then outstanding as to the
Indenture Estate; (2) execute and deliver one or more supplements to the
Indenture and the Mortgage for purpose of subjecting any such Modifications to
the Liens thereof; and (3) execute and deliver an amendment to the Lease to
reflect the adjustments required by clause (iii) below; provided, however, that
(a) the Owner Participant shall have been given the opportunity, but shall have
no obligation, to provide all or part of the funds required to finance the
Lessor's Percentage of the cost of any such Modification by making an Additional
Equity Investment in such amount, if any, as it may determine in its sole and
absolute discretion, but AEE shall have no obligation to accept such Additional
Equity Investment and (b) the conditions set forth below and in Section 2.12 of
the Indenture shall have been satisfied. The obligation to finance such
Modifications through the issuance of Additional Lessor Notes under Section 2.12
of the Indenture (any financing of Modifications through the issuance of such
Additional Lessor Notes under the Indenture being called a "Supplemental
Financing") is subject to the following additional conditions:
(i) there shall be no more than one such financing in
any calendar year (except for Required Modifications);
(ii) the Additional Lessor Notes shall have a final
maturity no later than the final maturity of the Lessor Notes
and will be fully repaid out of additional Rent during the
Lease Term;
(iii) appropriate adjustments to Basic Rent and
Termination Values (determined without regard to any tax
benefits associated with such Modifications, unless the Owner
Participant is making an Additional Equity Investment) shall
be made in accordance with Section 3.6 of the Lease;
(iv) AEE shall have paid, on an After-Tax Basis, all
costs and expenses of the Transaction Parties (including the
reasonable fees and expenses of counsel to the Owner
Participant, the Owner Trust and the Indenture Trustee and the
Pass Through Trustees) to the extent incurred in
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connection with any financing pursuant to this Section 12
whether or not such financing is consummated;
(v) no Lease Bankruptcy Default or Lease Event of
Default shall have occurred and be then continuing unless the
Modifications to be constructed with the proceeds of the
Additional Lessor Notes shall cure such Lease Bankruptcy
Default or Lease Event of Default and such Modifications shall
be made in compliance with the Operative Documents;
(vi) such Additional Lessor Notes represent an
aggregate amount not less than the Lessor's Percentage of $20
million, nor greater than 100% of the Lessor's Percentage of
the costs of such Modifications being financed; provided, that
the aggregate balance of the Lessor Notes never exceeds 85% of
the Fair Market Sales Value of the Undivided Interest taking
into account the Lessor's Percentage of all such
Modifications;
(vii) At AEE's expense, the Owner Participant shall
have received an opinion of independent tax counsel selected
by the Owner Participant and reasonably acceptable to AEE (in
form, scope and substance reasonably satisfactory to the Owner
Participant) that no material adverse tax consequences to the
Owner Participant will result from such financing (and in the
case of any such material adverse tax consequences AEE shall
provide appropriate financial assurance reasonably
satisfactory to the Owner Participant), and AEE shall have
indemnified the Owner Participant in accordance with Section
10 of the Participation Agreement and the Tax Indemnity
Agreement against all tax risk arising from such financing;
(viii) AEE shall have made or delivered such
representations, warranties, covenants, opinions or
certificates as the Owner Participant may reasonably request;
(ix) the Rating Agencies shall have confirmed that
such financing shall not result in a downgrade of the rating
on the Pass Through Certificates below the higher of (1) the
rating in effect on the Closing Date and (2) the rating then
in effect (except that in respect of Required Modifications,
this clause (ix) shall not be applicable);
(x) the Owner Participant shall have received a fee
from AEE in an amount equal to the Lessor's Percentage of
$100,000 (or of $50,000 in
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the event that the Owner Participant or any Affiliate thereof
has received a fee with respect to a similar financing of a
similar modification to the Related Facility being made
concurrently) for each such financing subsequent to the first
such financing; and
(xi) the issuance of any such Additional Notes
constitutes the incurrence of Permitted Indebtedness pursuant
to clause (b) or (c) of the definitions thereof, as
applicable.
Notwithstanding anything to the contrary contained herein, so long as no Lien on
the Facility or such Modification is created and subject to the restrictions on
incurring Indebtedness set forth in Section 6.1, AEE shall at all times have the
right to fund Modifications to the Facility other than through the Lease;
provided, however, that Required Modifications and Nonseverable Modifications
may only be financed (other than through the Lease) on an unsecured basis.
Section 12.2 Optional Refinancing of Pass Through
Certificates. AEE shall have the right, at its option and expense, exercisable
on three occasions at any time following the seventh anniversary of the Closing
Date, to request the Owner Trust or the Pass Through Trusts to refund or
refinance the Pass Through Certificates either in the public or private market,
in whole or in part; provided, that all conditions to the issuance of Additional
Lessor Notes contained in Section 2.12 of the Indenture shall have been
satisfied.
Any refinancing under this Section 12.2 shall also be subject
to the following additional conditions:
(i) the Owner Trust shall be able to issue and sell
debt in an amount adequate to accomplish such refunding or
refinancing;
(ii) the Additional Lessor Notes shall have a final
maturity no later than the six months following the scheduled
final maturity of the Lessor Notes and shall be fully repaid
out of Basic Rent (as adjusted pursuant to Section 3.6 of the
Lease) during the Lease Basic Term;
(iii) appropriate adjustments to Basic Rent and
Termination Values shall have been made in accordance with
Section 3.6 of the Lease;
(iv) no Lease Bankruptcy Default or Lease Event of
Default shall have occurred and be then continuing;
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(v) At AEE's expense, the Owner Participant shall
have received an opinion of independent tax counsel selected
by the Owner Participant and reasonably acceptable to AEE (in
form, scope and substance reasonably satisfactory to the Owner
Participant) that no material adverse tax consequences to the
Owner Participant will result from such refinancing (and in
the case of any such material adverse tax consequences AEE
shall provide appropriate financial assurance reasonably
satisfactory to the Owner Participant), and AEE shall have
indemnified the Owner Participant in accordance with Section
10 of the Participation Agreement and the Tax Indemnity
Agreement against all tax risk arising from such refinancing;
(vi) the Owner Participant shall suffer no adverse
accounting effects under GAAP;
(vii) AEE shall have made or delivered such
representation, warranties, covenants, opinions or
certificates as the Owner Participant may reasonably request;
(viii) the terms of such refinancing shall be
reasonably satisfactory to the Owner Trust and the Owner
Participant; and
(ix) the Owner Participant shall have received a fee
from AEE in an amount equal to the Lessor's Percentage of
$100,000 (or of $50,000 in the event that the Owner
Participant or any Affiliate thereof shall have received a
related fee with respect to a similar refinancing or refunding
of the Pass Through Certificates being made concurrently).
SECTION 13
LIMITATIONS OF LIABILITY; ACTION BY INDENTURE TRUSTEE
Section 13.1 Limitation of Liability. (a) None of the Owner
Participant, the Owner Trust, the Trustee, the Indenture Trustee, the Lease
Indenture Company or the Pass Through Trustees shall have any obligation or duty
to AEE or to others with respect to the transactions contemplated hereby, except
those obligations or duties expressly set forth in this Agreement and the other
Operative Documents, and none of the Owner Trust, the Trustee, the Trust
Company, the Indenture Trustee, the Lease Indenture Company or the Pass Through
Trustees shall be liable for performance by any other party hereto of
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such other party's obligations or duties hereunder. Without limitation of the
generality of the foregoing, under no circumstances whatsoever shall the Owner
Participant be liable to AEE for any action or inaction on the part of the
Trustee in connection with the transactions contemplated herein, whether or not
such action or inaction is caused by willful misconduct or gross negligence of
the Trustee, unless such action or inaction is at the express written
instructions of the Owner Participant.
(b) The Trustee is executing on behalf of the Owner Trust the
Operative Documents to which the Owner Trust is a party solely as trustee of the
Owner Trust under the Trust Agreement and not in its individual capacity, except
as expressly provided herein or therein, and in no case whatsoever shall the
Trustee be personally liable for, or for any loss in respect of, any of the
statements, representations, warranties, agreements or obligations of the Owner
Trust hereunder or under any other Operative Document, as to all of which the
other parties hereto agree to look solely to the Trust Estate; provided,
however, that the Trustee shall be liable under the Operative Documents to which
it is a party for its own gross negligence or willful misconduct.
Section 13.2 Action by Indenture Trustee. The parties hereto
acknowledge that any notice, consents or any other action by the Indenture
Trustee is limited by the terms of the Indenture.
SECTION 14
SPECIAL LESSEE TRANSFER
Section 14.1 Special Lessee Transfer. Upon the occurrence and
during the continuance of a Special Lessee Transfer Event, AEE (or its designee
as provided below) may, in lieu of performing its obligation to purchase the
Lessor's Interest pursuant to Section 10.2 of the Lease (in the case of a
Regulatory Event of Loss) or exercising its right to purchase the Lessor's
Interest pursuant to Section 13.1 or 13.2 of the Lease (in the case of a
Burdensome Buyout Event) and notwithstanding the limitations set forth in
Section 8.1, upon not less than 30 days' written notice to the Owner Participant
and the Indenture Trustee, purchase all (but not less than all) of the Owner
Participant's Beneficial Interest (the "Special Lessee Transfer") on the
applicable Termination Date at a price equal to the Special Lessee Transfer
Amount determined as of the date of such transfer and keep the Lease in effect.
On the applicable Termination Date, AEE shall pay to the Owner
Participant the Special Lessee Transfer Amount determined as of such date, plus
all amounts due and payable to the Owner Participant on such date (including,
without
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limitation, all costs and expenses of the Owner Participant and all sales, use,
value added and other Taxes covered by Section 10.2 hereof associated with the
Special Lessee Transfer pursuant to this Section 14.1, to the extent such
amounts have not otherwise been reimbursed pursuant to this Section 14.1).
Concurrently with the payment of all sums required to be paid pursuant to this
Section 14.1 (or on such later date of transfer of the Owner Participant's
Beneficial Interest in accordance with clause (ii) below) (i) AEE shall cease to
have any liability to the Owner Participant with respect to the Operative
Documents, except for obligations (including, without limitation, Sections 10.1
and 10.2 hereof and the Tax Indemnity Agreement) surviving pursuant to the
express terms of any Operative Document or which have otherwise accrued but not
been paid as of such date and (ii) the Owner Participant will transfer (by an
appropriate instrument of transfer) the Owner Participant's Beneficial Interest
to AEE; provided, however, that if the Lien of the Indenture has not been
terminated or discharged, such transfer shall not be made to AEE, but shall be
made to AEE's designee promptly upon AEE's designation of such designee and such
designee will agree not to transfer the Owner Participant's Beneficial Interest
to AEE until such Lien is terminated or discharged. In connection with any
transfer under this Section 14.1 the Owner Participant shall transfer the
Beneficial Interest on an "as is" "where is" basis without representation and
warranty other than a warranty of the Owner Trust as to the absence of Lessor's
Liens and a warranty of the Owner Participant as to the absence of Owner
Participant's Liens. It is understood and agreed among the parties hereto that
the transaction contemplated by this Section 14.1 shall not effect a merger of
AEE's ownership interest in the Facility and the Facility Site with the Lessor's
Interest. AEE will pay all reasonable costs and expenses of the parties
(including reasonable attorneys' fees and disbursements) in connection with any
transfer pursuant to this Section 14.1
Notwithstanding the foregoing, in the event that the Lessee
shall have failed to either purchase the Beneficial Interest in accordance with
this Section 14.1 or the Lessor's Interest in accordance with Section 10.2 of
the Lease, in each case only in connection with a Regulatory Event of Loss (and
only to the extent the transfer hereinafter described shall eliminate such
Regulatory Event of Loss), then the Owner Participant shall have the option
(exercisable in its sole discretion) to transfer the Beneficial Interest to AEE
(or its designee) on an "as is", "where is" basis, without recourse,
representation or warranty, but free and clear of Owner Participant's Liens and
Lessor's Liens, for a purchase price equal to the Special Lessee Transfer Amount
(together with all other amounts due and payable to the Owner Participant
hereunder or under the other Operative Documents); provided, however, that such
purchase price shall be payable in installments and evidenced by a note of AEE
(or its designee), subordinated (in the case of any obligation of AEE) in right
of payment to any senior Permitted Indebtedness of AEE (including Basic Rent)
and payable in installments only to the extent amounts that would
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otherwise be payable to the Owner Participant in accordance with the Operative
Documents; provided further, however, that, if the Lien of the Indenture shall
not have been terminated or discharged, (i) such transfer shall (A) not be made
to AEE, but shall be made to AEE's designee (and AEE shall promptly designate
such designee) and such designee shall agree not to transfer the Beneficial
Interest to AEE until such Lien shall have been terminated or discharged and (B)
not limit or otherwise alter any of the rights or remedies of the Indenture
Trustee under any of the Operative Documents including, without limitation, the
exercise of remedies by the Indenture Trustee under the Lease in respect of any
Lease Event of Default and (ii) AEE (or such designee) shall have no right to
exercise any rights or remedies as Owner Participant under the Lease or the
other Operative Documents.
Section 14.2 Non-Regulatory Event of Loss. In the event a
Regulatory Event of Loss would have occurred but for the circumstance set forth
in clause (i) or (ii) of the definition thereof, then the Owner Participant
shall have the option (exercisable in it sole discretion) to transfer the
Beneficial Interest to the Lessee on an "as is", "where is" basis, without
recourse, representation or warranty, but free and clear of Owner Participant's
Liens and Lessor's Liens, for a purchase price of $1.
SECTION 15
RIGHT OF FIRST OFFER
Section 15.1 Right of First Offer. So long as no Lease
Bankruptcy Default or Lease Event of Default shall have occurred and be then
continuing, in the event that the Owner Participant desires to Transfer its
Beneficial Interest (other than to an Affiliate of the Owner Participant) at any
time after the later to occur of (i) the date five years prior to the scheduled
expiration of the Lease Basic Term and (ii) the date on which the Lien of the
Indenture shall have been terminated or discharged, the Owner Participant shall
first offer to sell such Beneficial Interest to AEE on the terms and conditions
set forth in this Section 15.1. Such offer shall be made to AEE in the form of a
proposed term sheet, which proposed term sheet shall include a full and complete
statement of the price and all of the material terms, conditions and provisions
upon which the Owner Participant would be willing to Transfer its Beneficial
Interest or any part thereof, and such proposed term sheet shall be deemed
Confidential Information for purposes of Section 16.16. AEE shall thereafter
have the right within a period of 30 days from and after the receipt by AEE of
such proposed term sheet to notify the Owner Participant of its intent to
exercise its right to purchase hereunder. If AEE elects to exercise the right
provided in the preceding sentence, it shall within ninety (90) days of such
notice execute a contract on the same terms and conditions as the offer giving
rise to such right. If AEE does not give such notice to the Owner Participant
within such 30-day period or execute a contract within such 90-day period (and
complete such sale within 30 days of the date of the execution of such
contract), the Owner Participant may consummate a sale on terms which are not
substantially less favorable to the Owner Participant (taken as a whole) than
reflected in its offer to AEE (other than the stated purchase price of the
Beneficial Interest, which shall be not less than 98% of that offered to AEE)
without first offering such less favorable terms to AEE. If AEE
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timely executed such contract and, through no fault of the Owner Participant,
failed to consummate such sale, the Owner Participant shall thereafter be free
of any obligations under this Section 15.1. Notwithstanding any contrary term in
such offer, AEE shall be entitled, as part of its payment of the purchase price,
to assume the Lessor Notes to the extent permitted in Section 2.10(b) of the
Indenture.
SECTION 16
MISCELLANEOUS
Section 16.1 Consents. When the Owner Participant is deciding
whether to direct the Owner Trust to grant or withhold a consent that may be
requested of the Owner Trust in respect of any Operative Documents, the Owner
Participant shall make such decision pursuant to the same standard as is imposed
on the Owner Trust (such as "reasonably," "in its sole discretion" or
otherwise). The Owner Participant agrees to promptly consider any consent
requested of it or the Owner Trust under any of the Operative Documents and will
not unreasonably delay the granting or withholding of such consent in light of
the circumstances.
Section 16.2 Successor Trustee. The parties hereto agree that
the transfer or assignment pursuant to the terms of the Trust Agreement by the
Trustee to a successor Trustee, will not violate the terms of any Operative
Document.
Section 16.3 Bankruptcy of Trust Estate. If (i) all or any
part of the Trust Estate becomes the property of a debtor subject to the
reorganization provisions of Title 11 of the United States Code, as amended from
time to time, (ii) pursuant to such reorganization provisions the Owner
Participant is required, by reason of the Owner Participant being held to have
recourse liability to the debtor or the trustee of the debtor directly or
indirectly, to make payment on account of any amount payable as principal or
interest on the Lessor Notes, and (iii) the Indenture Trustee actually receives
any Excess Amount, as defined below, which reflects any payment by the Owner
Participant on account of clause (ii) above, the Indenture Trustee shall
promptly refund to the Owner Participant such Excess Amount. For purposes of
this Section 16.3, "Excess Amount"
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means the amount by which such payment exceeds the amount which would have been
received by the Indenture Trustee if the Owner Participant had not become
subject to the recourse liability referred to in clause (ii) above. Nothing
contained in this Section 16.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds thereof)
of the Owner Participant as contemplated by this Participation Agreement (other
than referred to in clause (ii)).
Section 16.4 Amendments and Waivers. No term, covenant,
agreement or condition of this Agreement may be terminated, amended or
compliance therewith waived (either generally or in a particular instance,
retroactively or prospectively) except by an instrument or instruments in
writing executed by each party hereto.
Section 16.5 Notices. Unless otherwise expressly specified or
permitted by the terms hereof all communications and notices provided for herein
shall be in writing or by a telecommunications device capable of creating a
written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, without limitation, by overnight mail or courier
service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon transmission
thereof; provided, that such transmission is promptly confirmed by either of the
methods set forth in clause (a) or (b) above, in each case addressed to each
party hereto at its address set forth below or, in the case of any such party
hereto, at such other address as such party may from time to time designate by
written notice to the other parties hereto:
If to AEE:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Project Manager
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If to the Owner Trust:
▇▇▇▇▇▇▇ Facility Trust A-1
c/o Wilmington Trust Company, as Trustee
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
If to the Owner Participant:
As set forth on Schedule 16.5
If to the Indenture Trustee:
BANKERS TRUST COMPANY
Mailbox #MS 5041
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Assistant Vice President
If to the Pass Through Trustee:
BANKERS TRUST COMPANY
Mailbox #MS 5041
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Assistant Vice President
A copy of all notices provided for herein shall be sent by the party giving such
notice to each of the other parties hereto.
Section 16.6 Survival. All warranties, representations,
indemnities and covenants made by any party hereto, herein or in any certificate
or other instrument
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delivered by any such party or on the behalf of any such party under this
Agreement shall be considered to have been relied upon by each other party
hereto and shall survive the consummation of the transactions contemplated
hereby and in the other Operative Documents regardless of any investigation made
by any such party or on behalf of any such party. In addition, the
indemnifications by AEE under Sections 10.1 and 10.2 of this Agreement and the
confidentiality provisions set forth in Section 16.16 shall expressly survive
the expiration or early termination (for whatever reason) of the Lease and the
transfer or other disposition of the respective interests of the Owner
Participant, the Owner Trust, the Indenture Trustee, the Lease Indenture
Company, the Pass Through Trustees in, to and under this Agreement and the other
Operative Documents and the resignation or removal of the Trustee.
Section 16.7 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of, and shall be enforceable by, the
parties hereto and their respective successors and assigns as permitted by and
in accordance with the terms hereof, including each successive holder of the
Beneficial Interest permitted under Section 8.1. Except as expressly provided
herein or in the other Operative Documents, no party hereto may assign its
interests herein without the consent of the other parties hereto.
Section 16.8 Business Day. Notwithstanding anything herein or
in any other Operative Document to the contrary, if the date on which any
payment is to be made pursuant to this Agreement or any other Operative Document
is not a Business Day, the payment otherwise payable on such date shall be
payable on the next succeeding Business Day with the same force and effect as if
made on such scheduled date and (provided such payment is made on such
succeeding Business Day) and no interest shall accrue on the amount of such
payment from and after such scheduled date to the time of such payment on such
next succeeding Business Day.
Section 16.9 Governing Law. This Agreement has been delivered
in the State of New York and shall be in all respects governed by and construed
in accordance with the laws of the State of New York including all matters of
construction, validity and performance.
Section 16.10 Severability. If any provision hereof shall be
invalid, illegal or unenforceable under Applicable Law, the validity, legality
and enforceability of the remaining provisions hereof shall not be affected or
impaired thereby.
Section 16.11 Counterparts. This Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one Agreement.
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Section 16.12 Headings and Table of Contents. The headings of
the sections of this Agreement and the Table of Contents are inserted for
purposes of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.
Section 16.13 Consent to Jurisdiction; Waiver of Trial by
Jury. (a) Each of AEE, the Owner Trust and the Owner Participant (i) hereby
irrevocably submits to the nonexclusive jurisdiction of the Supreme Court of the
State of New York, New York County (without prejudice to the right of any party
to remove to the United States District Court for the Southern District of New
York) and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York for the purposes of any suit, action or
other proceeding arising out of this Agreement, the other Operative Documents,
or the subject matter hereof or thereof or any of the transactions contemplated
hereby or thereby brought by any of the parties hereto or their successors or
assigns; (ii) hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State court,
or in such federal court; and (iii) to the extent permitted by Applicable Law,
hereby irrevocably waives, and agrees not to assert, by way of motion, as a
defense, or otherwise, in any such suit, action or proceeding any claim that it
is not personally subject to the jurisdiction of the above-named courts, that
the suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or that this Agreement, the
other Operative Documents, or the subject matter hereof or thereof may not be
enforced in or by such court.
(b) To the extent permitted by applicable law, each of the
parties hereto hereby irrevocably waives the right to demand a trial by jury, in
any such suit, action or other proceeding arising out of this Agreement, the
other Operative Documents, or the subject matter hereof or thereof or any of the
transactions contemplated hereby or thereby brought by any of the parties hereto
or their successors or assigns.
Section 16.14 Further Assurances. Each party hereto will
promptly and duly execute and deliver such further documents to make such
further assurances for and take such further action reasonably requested by any
party to whom such first party is obligated, all as may be reasonably necessary
to carry out more effectively the intent and purpose of this Participation
Agreement and the other Operative Documents.
Section 16.15 Effectiveness. The Participation Agreement has
been dated as of the date first above written for convenience only. This
Participation Agreement shall be effective on the date of execution and delivery
by each of the parties hereto.
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Section 16.16 Confidential Information. (a) Any information
regarding the Lease Financing, or otherwise regarding the Facility, the Related
Facility or either of the Additional Facilities and the use and operation
thereof which is proprietary or of competitive value to any Transaction Party
hereto and which is expressly identified in writing as confidential, including
the information provided pursuant to Section 5, shall be deemed "Confidential
Information". Each Transaction Party hereto receiving information (a "Receiving
Party") from any other Transaction Party hereto (a "Furnishing Party") agrees
not to use such Confidential Information for any purpose other than in
connection with the Lease Financing. Each of the Receiving Parties further
agrees to keep the Confidential Information confidential and not to disclose the
Confidential Information to any Person; provided, however, that each of the
Receiving Parties may make any disclosure of any portion of the Confidential
Information (1) to which the Furnishing Party gives its prior written consent or
(2) to any Related Party of such Receiving Party as such Receiving Party
determines has a need to know and who is informed by such Receiving Party of the
confidentiality obligations with respect to the Confidential Information, or (3)
to any auditors, accountants, counsel or professional advisors of such Receiving
Party as is related to such Person's respective duties or (4) to any of the
Rating Agencies in order to rate the Pass Through Certificates and to any
purchasers of the Pass Through Certificates which agrees to execute an agreement
agreeing to be bound by the provisions of this Section 16.16 or (5) to any
prospective or actual transferee of all or any part of the Indenture Estate in
connection with the enforcement of remedies or a sale of the Undivided Interest,
in each case, under the Operative Documents, provided, that prior to such
disclosure (i) such prospective or actual transferee is informed in writing by
the disclosing Receiving Party of the confidential nature of the Confidential
Information and the existence of this confidentiality provision and (ii) such
prospective or actual transferee agrees to execute an agreement agreeing to be
bound by the provisions of this Section 16.16 or (6) to any Owner Participant
Transferee or any potential transferee of all or any portion of the Owner
Participant's interests hereunder; provided, that prior to its disclosure (i)
such transferee is informed by the Owner Participant of the confidential nature
of the Confidential Information and the existence of this confidentiality
provision and (ii) such transferee agrees to execute an agreement agreeing to be
bound by the provisions of this Section 16.16 or (7) which is a reference to the
Lease Financing only published by any Transaction Party hereto in internal
publications that are not to be generally disseminated to the public or in
annual reports of such Transaction Party or any of its Affiliates. From and
after the date the transferee contemplated by clause (4), (5)(ii) or (6)(ii) of
the immediately preceding sentence executes the agreement required therein, such
transferee shall, for purposes of this Section 16.16, be included within term
"Receiving Party".
(b) Each Receiving Party will be responsible for any breach of this
Section by
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any of its respective Related Parties and such Receiving Party agrees to take
all reasonable measures (including, but not limited to, court proceedings) to
restrain its respective Related Parties from unauthorized disclosure or use of
Confidential Information (including, but not limited to, any notes, analyses,
compilations, studies or interpretations based upon or derived from the
Confidential Information, in whole or in part) and to ensure compliance with
this Section.
(c) Notwithstanding the foregoing paragraphs of this Section 16.16, no
Receiving Party shall be prohibited from using or disclosing Confidential
Information which (i) is or becomes generally available to the public other than
as a result of disclosure by such Receiving Party, (ii) was within such
Receiving Party's possession prior to its disclosure by the Furnishing Party,
(iii) is or was independently developed by the Receiving Party without the use
of the Confidential Information, (iv) becomes available to the Receiving Party
on a non-confidential basis after the date hereof from any third party which is
not known by such Receiving Party to be bound by a confidentiality agreement
with the Furnishing Party or any other Person, (v) is necessary for the
enforcement of such Receiving Party's rights or under any other Operative
Document during the continuance of a Lease Event of Default, (vi) is necessary
to comply with such Receiving Party's obligations under Applicable Laws, or
(vii) is properly required to be disclosed to any Government Entity having
jurisdiction over the Receiving Party so affected, provided that in the event of
disclosure under clause (vi) and (vii), the Receiving Party so affected shall
promptly notify the Furnishing Party of such requirement prior to such
disclosure so that the Furnishing Party may seek an appropriate protective order
or otherwise seek to protect the confidentiality of such Confidential
Information, it being understood that under such circumstances, only such
portion of the Confidential Information as is specifically and properly required
shall be disclosed under Applicable Law or to such Government Entity, as the
case may be.
(d) No failure or delay by any Transaction Party in exercising any
right, power or privilege under this Section 16.16, shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
future exercise thereof or the exercise of any other right, power or privilege
under this Section 16.16.
(e) Each of the Transaction Parties agrees that money damages would not
be a sufficient remedy for any breach of the provisions of this Section 16.16,
and that any affected Transaction Party shall be entitled to specific
performance and injunctive relief as remedies for any such breach. Such remedies
shall not be deemed to be the exclusive remedies for any breach of the
provisions of this Section 16.16 and shall be in addition to all other remedies
available at law or in equity, provided, that no Transaction Party hereto shall
be entitled to consequential damages.
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(f) As between AEE and the Owner Participant, this Section 16.16 shall
supersede any prior confidentiality agreement entered into by such parties
relating to the Lease Financing and such confidentiality agreement shall be of
no further force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be executed and delivered by their respective
officers thereunto duly authorized.
AES EASTERN ENERGY, L.P.
By:
-----------------------------------------
Name:
Title:
Date:
▇▇▇▇▇▇▇ FACILITY TRUST A-1,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Trustee
under the Trust Agreement
By:
-----------------------------------------
Name:
Title:
Date:
DCC PROJECT FINANCE FOURTEEN, INC.
By:
-----------------------------------------
Name:
Title:
Date:
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BANKERS TRUST COMPANY, not in its individual
capacity, except as expressly set forth
herein, but as Indenture Trustee under the
Indenture
By:
-----------------------------------------
Name:
Title:
Date:
BANKERS TRUST COMPANY, not in its individual
capacity, except as expressly set forth
herein, but as Pass Through Trustees under
the Pass Through Trust Agreements
By:
-----------------------------------------
Name:
Title:
Date:
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SCHEDULE 16.5
OWNER PARTICIPANT NOTICE
DCC Project Finance Fourteen, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Capital Markets Group
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Phone No: (▇▇▇) ▇▇▇-▇▇▇▇
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APPENDIX A - DEFINITIONS
(▇▇▇▇▇▇▇ A-1)
GENERAL PROVISIONS
In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:
(a) the terms set forth in this Appendix A or in any such
Operative Document shall have the meanings herein provided, and any
term used in an Operative Document and not defined therein or in this
Appendix A but in another Operative Document shall have the meaning
provided in such other Operative Document;
(b) any term defined in this Appendix A by reference to any
other document, instrument or agreement shall continue to have the
meaning ascribed thereto whether or not such other document, instrument
or agreement remains in effect;
(c) words importing the singular include the plural and vice
versa;
(d) words importing a gender include any gender;
(e) a reference to a part, clause, section, paragraph,
article, annex, appendix, exhibit, schedule or other attachment to or
in respect of an Operative Document is a reference to a part, clause,
section, paragraph, or article of, or an annex, appendix, exhibit,
schedule or other attachment to, such Operative Document unless, in any
such case, otherwise expressly provided in such Operative Document;
(f) a reference to any statute, decree, regulation,
proclamation, ordinance or law shall be construed as a reference to
such statute, decree, regulation, proclamation, ordinance or law as
re-enacted, redesignated, amended or extended from time to time, and a
reference to a statute includes all regulations, policies, protocols,
codes, proclamations and ordinances issued or otherwise applicable
under that statute unless, in any such case, otherwise expressly
provided in any such statute or in such Operative Document;
(g) a definition of or reference to any document, instrument
or agreement includes an amendment or supplement to, or restatement,
replacement, modification or novation of, any such document,
instrument, or agreement unless
97
otherwise specified in such definition or in the context in which such
reference is used;
(h) a reference to a particular section, paragraph or other
part of a particular statute shall be deemed to be a reference to any
other section, paragraph or other part substituted therefor from time
to time;
(i) if a capitalized term describes, or shall be defined by
reference to, a document, instrument or agreement that has not as of
any particular date been executed and delivered and such document,
instrument or agreement is attached as an exhibit to the Participation
Agreement (as hereinafter defined), such reference shall be deemed to
be to such form and, following such execution and delivery and, subject
to paragraph (g) above, to the document, instrument or agreement as so
executed and delivered;
(j) a reference to any Person (as hereinafter defined)
includes such Person's successors and permitted assigns;
(k) any reference to "days" shall mean calendar days unless
Business Days (as hereinafter defined) are expressly specified;
(l) if the date as of which any right, option or election is
exercisable, or the date upon which any amount is due and payable, is
stated to be on a date or day that is not a Business Day, such right,
option or election may be exercised, and such amount shall be deemed
due and payable, on the next succeeding Business Day with the same
effect as if the same was exercised or made on such date or day
(without, in the case of any such payment, the payment or accrual of
any interest or other late payment or charge, provided such payment is
made on such next succeeding Business Day);
(m) words such as "hereunder", "hereto", "hereof" and "herein"
and other words of similar import shall, unless the context requires
otherwise, refer to the whole of the applicable document and not to any
particular article, section, subsection, paragraph or clause thereof;
(n) a reference to "including" means including without
limiting the generality of any description preceding such term, and for
purposes hereof and of each Operative Document the rule of ejusdem
generis shall not be applicable to limit a general statement, followed
by or referable to an enumeration of specific matters, to matters
similar to those specifically mentioned; and
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(o) whenever in the Operative Documents a provision requires
that the rating of a Person or the Pass Through Certificates be
confirmed or is otherwise required, such provisions shall be deemed to
mean that both Rating Agencies shall have confirmed or provided the
rating of the senior long term unsecured debt of such Person or the
Pass Through Certificates, a copy of which confirmation shall be
delivered by the Lessee to the Owner Participant, the Owner Trust and,
so long as the Lien of the Indenture shall not have been terminated or
discharged, to the Indenture Trustee and shall be without indication
that such Persons or the Pass Through Certificates, as the case may be,
has been placed on credit watch, credit review, or any similar status
with negative implications or which does not indicate the direction of
the potential ratings change.
DEFINED TERMS
"Accounts" shall have the meaning specified in Section 2.2 of
the Depositary Agreement.
"Acquisition" shall mean the acquisition of six coal-fired
electric generating stations located in the western and west central part of New
York State and a railroad system used to transport coal pursuant to the Asset
Purchase Agreement.
"ACR" shall mean AES Creative Resources, L.P., a Delaware
limited partnership.
"Actual Knowledge" shall mean, with respect to any Person, the
actual knowledge of, including receipt of written notice by, a Responsible
Officer of such Person.
"Additional Equity Investment" shall mean the amount, if any,
the Owner Participant shall provide to finance all or a portion of the Lessor's
Percentage of the cost of any Modification financed pursuant to Section 12.1 of
the Participation Agreement.
"Additional Facilities" shall mean (a) the ▇▇▇▇▇▇ Generating
Station, a coal-fired power facility with a generating capacity of 126 MW
located near Johnson City, New York and (b) the ▇▇▇▇▇▇▇▇▇ Generating Station, a
coal-fired power facility with a generating capacity of 161 MW located near
Dresden, New York, in each case including all assets and property constituting a
part thereof.
"Additional Land" shall mean the land constituting a portion
of the Assigned Assets that is acquired and owned by AEE but not constituting
the Facility Site or any site on which the Related Facility or either of the
Additional Facilities is located and
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not otherwise necessary for the lease, use, operation or maintenance of the
Facility, the Related Facility or the Additional Facilities.
"Additional Lessor Notes" shall have the meaning specified in
Section 2.12 of the Indenture.
"Additional Liquidity Account" shall have the meaning set
forth in Section 2.2 of the Depositary Agreement.
"Additional Liquidity Initial Deposit" shall mean the deposit,
on the Closing Date, into the Additional Liquidity Account of either (a) cash or
(b) a letter of credit or surety bond, in form, scope and substance satisfactory
to the Owner Participant, issued for the account of AES by a bank (in the case
of a letter of credit) or insurance company (in the case of a surety bond) for
the benefit of AEE, acceptable to the Owner Participant, in each case of clauses
(a) and (b), in the amount of the Additional Liquidity Required Balance.
"Additional Liquidity Letter of Credit" shall mean, the
additional liquidity letter of credit issued by BankBoston dated May 14, 1999,
in the stated amount of $36,326,900, or any letter of credit issued in
replacement thereof (a) for the account of AEE, (b) by an LC Provider, (c) for
the benefit of the Depository Agent, (d) in the amount of the Additional
Liquidity Required Balance, or in the amount of the letter of credit being
replaced, and (e) in form, scope and substance substantially similar to the
Additional Liquidity Letter of Credit in effect on the Closing Date.
"Additional Liquidity Required Balance" shall mean an amount,
determined and fixed as of the Closing Date, equal to the greater of (a)
$65,000,000 less the Rent Reserve Account balance on the Closing Date and (b)
$30,000,000; provided, however, that at any time after the third anniversary of
the Closing Date (A) the Additional Liquidity Required Balance shall be
permanently reduced by one-half at such time as (i) the Pass Through
Certificates are rated Baa3 by ▇▇▇▇▇'▇ and BBB- by S&P, (ii) before and after
any PPA Term, (x) the average Coverage Ratio for the immediately preceding
three-year period is not less than 2.5 to 1.0 and (y) the minimum Coverage Ratio
for each of the immediately preceding three years is not less than 2.0 to 1.0;
and (iii) during any PPA Term, (x) the average Coverage Ratio for the
immediately preceding three-year period is not less than 1.5 to 1.0 and (y) the
minimum Coverage Ratio for each of the immediately preceding three years is not
less than 1.4 to 1.0 and (B) the Additional Liquidity Required Balance shall be
permanently reduced to zero at such time as (i) the Pass Through Certificates
are rated Baa2 by ▇▇▇▇▇'▇ and BBB by S&P, (ii) before and after any PPA Term,
(x) the average Coverage Ratio for the immediately preceding three-year period
is not less than 2.5 to 1.0 and (y) the minimum Coverage Ratio for each of the
immediately preceding three years is not less than 2.0 to 1.0 and (iii) during
any PPA Term, (x) the average Coverage Ratio for the immediately
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preceding three-year period is not less than 1.75 to 1.0 and (y) the minimum
Coverage Ratio for each of the immediately preceding three years is not less
than 1.5 to1.0.
"Additional Pass Through Certificates" shall mean any Pass
Through Certificates issued by any Pass Through Trust in connection with the
issuance of Additional Lessor Notes relating thereto.
"Advance Rent" shall have the meaning specified in Section 3.3
of the Lease.
"Advisor to AEE" shall mean ▇▇▇▇▇▇▇ & Miles Incorporated.
"AEE" shall mean AES Eastern Energy, L.P., a Delaware limited
partnership.
"AEE 2" shall mean AEE 2, L.L.C., a limited liability company
organized under the laws of the State of Delaware.
"AEE Entities" shall mean AES NY (the sole general partner of
AEE), AES NY2 (the sole limited partner of AEE), AES NY3 and the AEE
Subsidiaries.
"AEE Extraordinary Revenues" shall mean any revenues
attributable to any extraordinary, non-recurring or one-time credit, payment or
event, including proceeds of insurance (other than business interruption
insurance) or condemnation awards.
"AEE's Fee Policy" shall mean, collectively, the Owner's
Policy of title insurance No. Y1010358 issued by First American dated the
Closing Date and the Owner's Policy of title insurance No. 9915-25003 issued by
Chicago Title dated the Closing Date, insuring AEE's fee estate in the Facility
Site and subleasehold estate in the Facility and the Facility Site, subject only
to Permitted Encumbrances.
"AEE's Interest" shall mean AEE's interest in and to (a) the
Undivided Interest under the Lease and (b) the Ground Interest under the Site
Sublease.
"AEE Revenues" shall mean all cash revenues and other cash
sums from time to time received by or on behalf of AEE or any AEE Subsidiary,
including, without limitation, (a) the proceeds of the sale of power, energy and
capacity and by-products thereof and ancillary services generated by the
Facility and each other electric generating asset, including the Related
Facility and the Additional Facilities, now or hereafter owned by AEE or AEE 2
or any other AEE Subsidiary and the proceeds of sale of emission
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allowances, (b) the proceeds of business interruption insurance policies, (c)
any AEE Extraordinary Revenues, including the proceeds of the sale or lease of
any assets of AEE or AEE 2 or any other AEE Subsidiary to the extent permitted
under the Operative Documents and (d) any earnings on Permitted Investments,
including any accretion in value thereof; provided, however, that AEE Revenues
shall not include (i) any borrowings (including any borrowings under the Working
Capital Facility) or capital contributions, (ii) any drawings under any Payment
Undertaking Agreement, or any instrument, letter of credit, surety, or other
undertaking held in any Account, (iii) any transfer of amounts from any Account
to any other Account or (iv) any reimbursement of amounts held in escrow by the
Owner Trust or the Indenture Trustee under the Operative Documents.
"AEE Subsidiaries" shall mean AEE 2, AES Somerset, L.L.C.
(relating to ▇▇▇▇▇▇▇), AES Cayuga, L.L.C. (relating to ▇▇▇▇▇▇▇▇), AES ▇▇▇▇▇▇▇▇,
L.L.C. (relating to ▇▇▇▇▇▇) and AES ▇▇▇▇▇▇▇▇▇, L.L.C. (relating to ▇▇▇▇▇▇▇▇▇)
and any other Subsidiary of AEE created after the Closing Date.
"AES" shall mean The AES Corporation, a corporation organized
under the laws of the State of Delaware.
"AES NY" shall mean AES NY, L.L.C., a limited liability
company organized under the laws of the State of Delaware and the sole general
partner of AEE.
"AES NY2" shall mean AES NY2, L.L.C., a limited liability
company organized under the laws of the State of Delaware and the sole limited
partner of AEE.
"AES NY3" shall mean AES NY3, L.L.C., a limited liability
company organized under the laws of the State of Delaware.
"Affiliate" of a particular Person shall mean any Person
directly or indirectly controlling, controlled by or under common control with
such particular Person. For purposes of this definition, "control" when used
with respect to any particular Person shall mean the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meaning correlative to the foregoing;
provided, however, that under no circumstances shall the Trust Company or the
Trustee be considered to be an Affiliate of any of the Owner Trust or the Owner
Participant, nor shall any of the Owner Trust or the Owner Participant be
considered to be an Affiliate of the Trust Company or the Trustee.
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"Affiliate Transaction" shall mean any transaction entered
into between AEE or AEE 2 or any other AEE Subsidiary, on the one hand, and AES
or any Affiliate of AES (other than AEE, AEE 2 or any other AEE Subsidiary), on
the other.
"After-Tax Basis" shall mean, in the context of determining
the amount of a payment to be made on such basis, the payment of an amount
which, after reduction by the net increase in Taxes of the recipient (actual or
constructive) by reason of such payment, which net increase shall be calculated
by taking into account any reduction in such Taxes resulting from any Tax
benefits realized or to be realized by the recipient as a result of such
payment, shall be equal to the amount required to be paid. In calculating the
amount payable by reason of this provision, all income taxes payable and tax
benefits realized or to be realized shall be determined on the assumptions that
(a) the recipient shall be subject to the applicable income taxes at the highest
marginal tax rates then applicable to corporate taxpayers taxed on the same
basis as the recipient that are in effect in the applicable jurisdictions at the
time such amount is received or properly accrued, and (b) all related tax
benefits are utilized at the highest marginal rates then applicable to corporate
taxpayers taxed on the same basis as the recipient that are then in effect in
the applicable jurisdictions.
"Annual Operating Budget" shall mean, for any applicable
calendar year, each annual operating plan and budget for the Facility, the
Related Facility and the Additional Facilities adopted by AEE pursuant to
Section 5.9 of the Participation Agreement in the form attached as Schedule 5.9
to the Participation Agreement setting forth in reasonable detail all Pro Forma
Operating and Maintenance Costs and other expenses (including capital
expenditures) reasonably foreseeable or anticipated to be made during such year
by categories and amounts.
"Applicable Law" shall mean all applicable laws, including,
without limitation, all Environmental Laws, and treaties, judgments, decrees,
injunctions, writs and orders of any court, arbitration board or Governmental
Entity and rules, regulations, orders, ordinances, licenses and permits of any
Governmental Entity.
"Appraisal Procedure" shall mean (except with respect to the
Closing Appraisal and any appraisal to determine Fair Market Rental Value or
Fair Market Sales Value after a Lease Event of Default shall have occurred and
be then continuing), an appraisal conducted by an appraiser or appraisers in
accordance with the following procedures: the Owner Participant and AEE shall
consult with the intent of selecting a mutually acceptable Independent
Appraiser. If a mutually acceptable Independent Appraiser is selected, the Fair
Market Sales Value or Fair Market Rental Value shall be determined by such
Independent Appraiser. If AEE and the Owner Participant are unable to agree upon
a single Independent Appraiser within a 10-day period, one shall be
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appointed by the Owner Participant, and one shall be appointed by AEE (or its
designee), which Independent Appraisers shall attempt to agree upon the value,
period, amount or other determination that is the subject of the appraisal. If
either the Owner Participant or AEE does not appoint its appraiser, the
determination of the other appraiser shall be conclusive and binding on the
Owner Participant and AEE. If the appraisers appointed by the Owner Participant
and AEE are unable to agree upon the value, period, amount or other
determination in question within a 20-day period, such appraisers shall jointly
appoint a third Independent Appraiser within 10 days after such 20-day period,
or, if such appraisers do not appoint a third Independent Appraiser, the Owner
Participant and AEE shall jointly appoint the third Independent Appraiser. In
such case, the average of the determinations of the three appraisers shall be
conclusive and binding on the Owner Participant and AEE, unless the
determination of one appraiser is disparate from the middle determination by
more than twice the amount by which the third determination is disparate from
the middle determination, in which case the determination of the most disparate
appraiser shall be excluded, and the average of the remaining two determinations
shall be conclusive and binding on the Owner Participant and AEE. The timetable
for any Appraisal Procedure shall be appropriately accelerated to meet the
applicable deadlines set forth in any of the Operative Documents.
"Appraiser " shall mean Stone & ▇▇▇▇▇▇▇ Management
Consultants, Inc.
"Arrears Rent" shall have the meaning specified in Section 3.3
of the Lease.
"Asset Purchase Agreement" shall mean the Asset Purchase
Agreement, dated as of August 3, 1998, among AES NY, as "Buyer", and NYSEG and
NGE, as "Sellers".
"Assigned Assets" shall mean the Facility Assets, the Related
Assets, the Additional Facilities and all of the other assets that are the
subject of the Acquisition, provided, however, that Assigned Assets shall not
include (a) those assets acquired by ACR, (b) the capital stock of Somerset
Railroad acquired by AES NY3 and (c) emission allowances.
"Assigned Documents" shall have the meaning specified in
clause (2) of the Granting Clause of the Indenture.
"Assignment and Assumption Agreement" shall mean an assignment
and assumption agreement in form and substance substantially in the form of
Exhibit A to the Participation Agreement.
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"Assignment of Leases" shall mean the Assignment of Leases,
Rents and Income (▇▇▇▇▇▇▇ A-1), dated as of May 1, 1999, given by the Owner
Trust to the Indenture Trustee.
"Authorized Agent" shall have the meaning specified in the
Pass Through Trust Agreements.
"Bankruptcy Code" shall mean the United States Bankruptcy Code
of 1978, 11 U.S.C. Section 101 et seq.
"Base Case Projections" shall mean those projections
identified as such in Schedule 3.1(j) to the Participation Agreement.
"Basic Rent" shall have the meaning specified in Section 3.3
of the Lease.
"Basic Rent Discount Rate" shall mean the discount rate used
to calculate the net present value of Basic Rent to the Lessee as specified in
the Pricing Assumptions.
"Basic Term Rent" shall have the meaning specified in Section
3.3 of the Lease.
"Beneficial Interest" shall mean the interest of the Owner
Participant in the Trust.
"▇▇▇▇ of Sale" shall mean the ▇▇▇▇ of Sale (▇▇▇▇▇▇▇ A-1),
dated the Closing Date, between NYSEG and NGE and the Lessor, duly completed,
executed and delivered on the Closing Date, pursuant to which the Lessor will
acquire the Undivided Interest from NYSEG and NGE.
"Burdensome Buyout Event" shall mean, with respect to the
Undivided Interest, the occurrence of any event which gives AEE the right to
terminate the Lease pursuant to Section 13.1 or 13.2 thereof.
"Burdensome Buyout Price" shall mean an amount equal to (a) in
the case of an event set forth in Section 13.1 of the Lease, the Termination
Value determined as of the applicable Termination Date and (b) in the case of an
event set forth in Section 13.2 of the Lease, the higher of (i) the Termination
Value determined as of the applicable Termination Date and (ii) the "Fair Market
Sales Value" of the Undivided Interest determined as of the applicable
Termination Date, as such "Fair Market Sales Value" shall be determined by an
appraisal conducted according to the Appraisal Procedure and on the assumption
that the Facility has been maintained in accordance with the terms of the Lease
and is not subject to and burdened by the Lease (and with regard to an appraisal
in
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connection with Section 13.2(b) of the Lease, assuming any Response Plan
required by Section 5.5 of the Lease has been fully and correctly implemented).
"Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which commercial banking institutions are authorized or
required by law, regulation or executive order to be closed in New York, New
York, the city and the state in which the Corporate Trust Department of the
Trustee is located or the city and state in which the Corporate Trust Office of
the Indenture Trustee or the Pass Through Trustees is located.
"CADS" shall mean, for any relevant period, the excess,
calculated on a cash basis, of (a) all AEE Revenues received (or, in the case of
any future period as of the time of calculation, projected (Pro Forma) to be
received) during such period (other than payments made by AEE or any AEE
Subsidiary to AEE or any AEE Subsidiary) over (b) all Operating and Maintenance
Costs paid (or, in the case of any future period as of the time of calculation,
projected (Pro Forma) to be paid) during such period; provided, however, that
AEE Extraordinary Revenues shall not be included in AEE Revenues for purposes of
any calculation of CADS for any future period.
"Certificate Purchase Agreement" shall mean the Purchase
Agreement, dated as of May 1, 1999, between AEE and the Initial Purchasers.
"Certificateholders" shall mean each of the holders of the
Pass Through Certificates, and each of such holder's successors and permitted
assigns.
"Certificates Register" shall mean the "Register" specified in
Section 3.4 of the Pass Through Trust Agreement.
"Chicago Title" shall mean Chicago Title Insurance Company.
"Claim" shall mean any liability (including, without
limitation, in respect of negligence (whether passive or active or other torts),
strict or absolute liability in tort or otherwise, warranty, latent or other
defects (regardless of whether or not discoverable), product liability,
statutory liability, property damage, bodily injury or death), obligation, loss,
settlement, damage, penalty, claim (including, without limitation, claims for
enforcement, cleanup, removal, response, remediation or other actions or
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief pursuant to any Environmental Laws or alleged injury or threat
of injury to health, safety, the environment or natural resources), action,
suit, proceeding (whether civil or criminal), judgment, penalty, fine and other
legal or administrative sanction, judicial or administrative
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proceeding, cost, expense or disbursement, including reasonable legal,
investigation and expert fees, expenses and reasonable related charges, of
whatsoever kind and nature.
"Closing" shall have the meaning specified in Section 2.2(a)
of the Participation Agreement.
"Closing Appraisal" shall mean the appraisal, dated the
Closing Date, prepared by the Appraiser with respect to the Undivided Interest,
to the effect that, as of the Closing Date:
(i) the Facility constitutes a single, fully integrated
system, of which each of the components is interrelated in terms of
useful life, structure and design, and none of such components are
designed for, or intended for use in, commercial operation independent
of the other components of such operational unit;
(ii) the Facility does not require any addition, modification
or improvement (other than ancillary items of a kind customarily
selected and furnished by lessees of property of the same kind as the
Facility) in order to be complete for its intended use by the Lessee;
(iii) the remaining economic useful life of the Facility is
reasonably expected to be at least 45 years;
(iv) the Facility will have an economic useful life at the end
of the Lease Fixed Term at least equal to 20% of its originally
estimated useful life;
(v) the fair market value of the Undivided Interest on the
Closing Date is estimated to be an amount which is equal to the
Purchase Price;
(vi) the rents payable by the Ground Lessee to the Ground
Lessor under Section 4.1(a) of the Site Lease are fair market value
rents;
(vii) the fair market value of the Undivided Interest at the end
of the proposed Lease Fixed Term will exceed 20% of its fair market
value on the Closing Date, without including in such value any increase
or decrease for inflation or deflation during such term;
(viii) taking into account the effect and existence of the
Support Agreements, the Facility does not constitute limited-use
property under Rev. Proc. 76-30 and, at the expiration or termination
of the Lease, it will be commercially feasible for a party other than
AEE or its Affiliates to operate the Facility;
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(ix) taking into account the effect and existence of the
Support Agreements, the Undivided Interest does not constitute
limited-use property under Rev. Proc. 76-30 and, at the expiration or
termination of the Lease, it will be commercially feasible for the
Lessor to either (A) take and dispose of its share of the power
generated by the Facility, or (B) lease or sell its Undivided Interest
to a Person other than the Lessee or a party related to the Lessee in a
manner in which the projected residual value of the Undivided Interest
may be expected to be achieved;
(x) it is reasonable to expect that the Lessor will realize
the residual value of the Undivided Interest irrespective of whether
the Lessor leases or otherwise transfers the Undivided Interest to AEE
or a party unrelated to AEE upon the expiration of the Lease;
(xi) the Purchase Price of the Undivided Interest is allocable
to depreciation categories for federal income tax purposes in the
following manner:
- 20-year property - 95%
- 39-year property - 5%; and
(xii) such other matters as the Owner Participant shall
reasonably request.
"Closing Date" shall have the meaning specified in Section
2.2(a) of the Participation Agreement.
"Coal Hauling Agreement" shall mean the Coal Hauling
Agreement, dated as of May 10, 1999, among Somerset Railroad, AES NY3 and AEE.
"Code" shall mean the Internal Revenue Code of 1986.
"Competitor" shall mean any Power Production Company engaged
in the Power Production Business within the NEPOOL, NYPP or PJM markets;
provided that an "Initial Eligible Transferee" shall not be deemed to be a
"Competitor" within the meaning hereof unless subsequent to its acquisition of
the Beneficial Interest, it shall become a Power Production Company engaged in
the Power Production Business within the NEPOOL, NYPP or PJM markets.
"Component" shall mean any appliance, part, instrument,
appurtenance, accessory, furnishing, equipment or other property of whatever
nature that may from time to time be incorporated in, installed on or attached
to the Facility, except to the extent constituting Modifications.
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"Confidential Information" shall have the meaning specified in
Section 16.16 of the Participation Agreement.
"Consolidated Subsidiary" shall mean, with respect to any
Person at any date, any Subsidiary or other entity the accounts of which would
be consolidated in accordance with GAAP with those of such Person in its
consolidated financial statements as of such date.
"Corporate Trust Department" shall mean the principal
corporate trust office of the Trustee in Wilmington, Delaware, at which its
corporate trust business shall be principally administered, which office at the
date of the execution of the Trust Agreement is located at ▇▇▇▇▇▇ Square North,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration, telecopy no.: ▇▇▇-▇▇▇-▇▇▇▇.
"Corporate Trust Office" shall have the meaning specified in
the Pass Through Trust Agreements.
"Coverage Ratio" shall mean, for any relevant period, the
ratio of (a) CADS for such period to (b) Fixed Charges for such period.
"Debt Repayment Account" shall have the meaning specified in
Section 2.2 of the Depositary Agreement.
"Debt Service" shall mean all payments, including principal
and interest payments (including the net costs under interest rate hedge
agreements and all capitalized interest), in respect of Indebtedness of AEE and
AEE 2 and any other AEE Subsidiary (but excluding Basic Rent and basic rent
under all Other Leases and Related Leases, and any principal or interest
payments under the Working Capital Facility or any other working capital
facility and Permitted Subordinated Indebtedness).
"Deed" shall mean the Deed (▇▇▇▇▇▇▇ A-1), dated as of the
Closing Date, by NYSEG and NGE in favor of the Owner Trust duly completed,
executed and delivered on the Closing Date pursuant to which (together with the
▇▇▇▇ of Sale) the Owner Trust shall acquire the Undivided Interest from NYSEG
and NGE.
"Default Discount Rate" shall mean the Prime Rate plus 3%.
"Deferrable Basic Rent" shall have the meaning specified in
Section 3.4 of the Lease.
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"Deferrable Basic Rent Accrual Rate" shall mean, at any time prior to the
Deferrable Basic Rent Maturity Date, 18.19% per annum, and thereafter, the
applicable Overdue Rate.
"Deferrable Basic Rent Maturity Date" shall mean the earlier
of (a) the date of occurrence of any Lease Bankruptcy Default or Lease Event of
Default, (b) with respect to all or any portion of any Deferrable Payment, the
Rent Payment Date on which sufficient available funds are on deposit in the
Deferrable Basic Rent Account to pay all or such portion of such Deferrable
Payment, (c) the Rent Payment Date next following the scheduled date of maturity
of the Lessor Notes (and without taking into account any Additional Lessor
Notes) and (d) the earlier of the Lease Expiration Date and the date of any
termination of the Lease Term pursuant to Section 10, 13 or 14 of the Lease (or
the date of any Special Lessee Transfer) and the date of any purchase by the
Lessee of the Beneficial Interest pursuant to Section 8.1(b), 14 or 15 of the
Participation Agreement.
"Deferrable Interest" shall have the meaning set forth in
Section 3.4 of the Lease.
"Deferrable Payment Account" shall have the meaning set forth
in Section 2.2 of the Depositary Agreement.
"Deferrable Payments" shall have the meaning specified in
Section 3.4 of the Lease.
"Definitions Schedule 1" means that certain Schedule 1
attached hereto.
"Delaware Act" shall mean the Delaware Business Trust Act, 12
Del.C. 3801, et seq.
"Depositary Agent" shall mean Bankers Trust Company, a New
York banking corporation.
"Depositary Agreement" shall mean the Deposit and Disbursement
Agreement, dated as of May 1, 1999, among AEE, the AEE Subsidiaries, the Working
Capital Provider, the Owner Trust, the Other Lessors, the Related Lessors, the
Owner Participant, the Other Owner Participants, the Related Owner Participants,
the Depositary Agent, the Indenture Trustee (and each indenture trustee under
any Other Indenture or in respect of any Related Lease) and each Pass Through
Trustee.
"Depreciation Deductions" shall have the meaning specified in
Section 2(d) of the Tax Indemnity Agreement.
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"Discount Rate" shall mean the average coupon on the Lessor
Notes.
"Distribution" shall mean, with respect to any Person, (a) the
declaration or payment of any dividend or making of any other payment or
distribution (including, without limitation, any dividend or distribution in
connection with any merger or consolidation involving such Person) on account of
such Person's equity interests or to the direct or indirect holders of such
Person's equity interests in their capacity as such (other than dividends or
distributions payable in equity interests of such Person), (b) the purchase,
redemption or other acquisition or retirement by such Person for value of any
equity interests of such Person or (c) the making of any principal payment on,
or the purchase, redemption, defeasance or other acquisition or retirement for
value of any Indebtedness of such Person to an Affiliate thereof not wholly
owned by such Person.
"Distribution Account" shall have the meaning set forth in
Section 2.2 of the Depositary Agreement.
"Dollars" or the sign "$" shall mean United States dollars or
other lawful currency of the United States.
"DTC" shall mean The Depository Trust Company, a New York
corporation.
"Easements" shall have the meaning specified in the recitals
to the Site Lease.
"Eligible Transferee" shall mean any of (a) during the
12-month period immediately following the Closing Date, an Initial Eligible
Transferee, (b) any Other Owner Participant or Related Owner Participant or any
Affiliate thereof, (c) any bank or insurance company or (d) any finance company
that is not owned by (i) a Power Production Company engaged in the Power
Production Business within the NEPOOL, NYPP or PJM markets or (ii) any Affiliate
of such Power Production Company.
"Enforcement Notice" shall have the meaning specified in
Section 5.1 of the Indenture.
"Engineering Report" shall mean the report of the Independent
Engineer, dated May 14, 1999, and addressed to the Owner Participant.
"Environmental Conditions" shall mean any action, omission,
event, condition or circumstance, including, without limitation, the presence of
any Hazardous Substance, which does or reasonably could (a) involve any action,
suit, injunction, penalty, fine, lien, claim (whether administrative, judicial
or private in nature), (b) require
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assessment, investigation, abatement, correction, removal or remediation, (c)
give rise to any obligation or liability of any nature (whether civil or
criminal, arising under a theory of negligence or strict liability, or
otherwise) under any Environmental Law, (d) create or constitute a public or
private nuisance or trespass or (e) constitute a violation of or non-compliance
with any Environmental Law.
"Environmental Consultant" shall mean TRC Environmental
Corporation.
"Environmental Law" shall mean (a) any federal, state or local
laws, ordinances, rules, orders, statutes, decrees, judgments, injunctions,
directives, permits, licenses, approvals, codes and regulations relating to the
handling, use, control, management, treatment, storage, disposal, release or
threat of release of any Hazardous Substances including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),
42 U.S.C. Sections 9601 et seq., the federal Resource Conservation and Recovery
Act (RCRA), 42 U.S.C. Sections 6901 et seq., the federal Water Pollution Control
Act (also known as the federal Clean Water Act) (CWA), 33 U.S.C. Section 1251 et
seq., the federal Clean Air Act (CAA), 42 U.S.C. Section 7401 et seq., the Toxic
Substances Control Act (TSCA), 7 U.S.C. Section 136 et seq., the Safe Drinking
Water Act (SDWA), 42 U.S.C. Section 300f et seq., the Occupation Safety and
Health Act of 1970 (OSHA), 29 U.S.C. Section 651 et seq., all regulations
promulgated thereunder and any similar state or local laws, rules or
regulations, and (b) any and all requirements arising under applicable present
and future federal, state or local laws, statutes, common law, rules,
ordinances, codes, orders, licenses, permits, approvals, plans, authorizations,
concessions, or the like, and all applicable judicial, administrative, and
regulatory decrees, judgments, and orders relating to the protection of human
health or the environment including, without limitation, (i) any and all
requirements pertaining to reporting, licensing, authorizing, approving,
permitting, investigating, and remediating emissions, discharges, releases, or
threat of releases of any Hazardous Material into the indoor or outdoor air,
surface water, groundwater, or land, or otherwise into the environment, or
relating to the manufacture, operation, processing, distribution, use,
treatment, storage, disposal, transport, handling or management of any Hazardous
Material, and (ii) any and all requirements pertaining to the protection of the
health and safety of employees or the public and/or the environment.
"Environmental Report" shall mean that certain report dated as
of November 1998, prepared by the Environmental Consultant as it relates to the
Facility and the Facility Site, based upon and together with the Phase I
Environmental Survey and Phase II Environmental Survey specifically relating to
the Facility and the Facility Site dated February 26, 1998 and April 30, 1998,
respectively, prepared by Pilko & Associates, Inc., in connection with the
Acquisition.
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"EPC Contract" shall mean the Engineering, Procurement and
Construction Agreement, dated as of October 21, 1998, between AES NY and The
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Company for the construction and installation of the SCR on the
Facility Site.
"Equity Investment" shall mean the amount set forth on
Definitions Schedule 1.
"Equity Portion of Basic Rent" shall mean, as of any Rent
Payment Date, an amount equal to the excess, if any, of (a) Basic Rent due on
such date over (b) the principal amount of, and accrued interest on, the Lessor
Notes scheduled (in accordance with the payment terms of the Lessor Notes) to be
due on such date.
"Equity Portion of Termination Value" shall mean, in respect
of any determination of Termination Value or any amount determined by reference
to Termination Value payable pursuant to the Operative Documents, an amount
equal to the excess, if any, of (a) the Termination Value set forth opposite the
Termination Date corresponding to such date of determination on Schedule 2 of
the Lease, and, if such date of determination is a Rent Payment Date, Basic Rent
(including Deferrable Payments) scheduled to be due on that date (to the extent
payable in arrears) over (b) the principal amount of, and accrued interest on,
the Lessor Notes scheduled (in accordance with the payment terms of the Lessor
Notes) to be outstanding on such date (and, if such date is a Rent Payment Date,
including any interest or principal due on such date (in accordance with the
payment terms of the Lessor Notes) in respect of the Lessor Notes).
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that is a member of a group of which the Lessee is a member
and which is treated as a single employer under Section 414 of the Code.
"Event of Default" shall mean an Event of Default under any of
the Pass Through Trust Agreements.
"Event of Loss" shall mean any of the following events:
(a) the actual or constructive loss of the Facility or the use
thereof due to destruction or damage to the Facility that renders
repair uneconomic or that renders the Facility permanently unfit for
normal use (including such destruction or damage that does not permit
AEE to satisfy the preconditions for rebuilding of the Facility
provided in Section 10.3 of the Lease; or
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(b) any damage to the Facility that results in an insurance
settlement with respect to the Facility on the basis of a total loss or
an agreed constructive or a compromised total loss of the Facility; or
(c) the seizure, condemnation, confiscation or taking of, or
requisition of title to or use of the Facility by any Governmental
Entity (a "Requisition"), for a period of 12 consecutive months (in the
case of a Requisition of title) or 36 consecutive months (in the case
of any other Requisition) or (in any case) for a period (including any
period of contest) beyond or reasonably foreseeable to extend beyond
the Lease Basic Term or any Renewal Term then in effect or then elected
by AEE, it being understood that AEE shall have the right (in its
reasonable good faith judgment) to contest or appeal any such
Requisition; provided, however, that no such contest or appeal shall be
permitted if a Lease Material Default or Lease Event of Default shall
have occurred and be then continuing; or
(d) if elected in writing by the Owner Participant and only in
circumstances where the termination of the Lease shall remove the basis
of the regulation described below, subjection of the Owner Participant
or the Owner Trust to any public utility regulation of any Governmental
Entity which, in the reasonable opinion of such Owner Participant, is
burdensome, or the subjection of the Owner Participant's or the Owner
Trust's interest in the Lease to any rate of return regulation by any
Governmental Entity, in either case by reason of the participation of
the Owner Trust or the Owner Participant in the transactions
contemplated by the Operative Documents and not, in any event, as a
result of (i) investments, loans or other business activities of the
Owner Participant or the Owner Trust (or any of their Affiliates), as
applicable, or (ii) a failure of the Owner Participant or the Owner
Trust, as applicable, to perform routine, administrative or ministerial
actions the performance of which would not subject such Person to any
adverse consequence, provided that AEE and the Owner Trust and Owner
Participant agree to cooperate and to take reasonable measures to
alleviate the source or consequence of any regulation constituting an
Event of Loss under this paragraph (d) (a "Regulatory Event of Loss"),
so long as there shall be no adverse consequences to the Owner Trust or
Owner Participant as a result of such cooperation or the taking of
reasonable measures.
The date of occurrence of an Event of Loss described in
clauses (a) and (b) above shall be the earlier of (i) the date of AEE's notice
to the Lessor, the Owner Participant and the Indenture Trustee pursuant to
Section 10.1 of the Lease that it does not elect to rebuild the Facility
pursuant to Section 10.3 of the Lease but to pay Termination Value and terminate
the Lease pursuant to Section 10.2 thereof, and (ii) the
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date an Event of Loss is deemed to occur pursuant to the last sentence of
Section 10.1 of the Lease. The date of occurrence of an Event of Loss described
in clause (c) above shall be the earlier of (i) the date upon which AEE shall
have concluded all efforts to contest or appeal such Requisition and (ii) the
date an Event of Loss is deemed to occur pursuant to such clause (c). The date
of occurrence of an Event of Loss described in clause (d) above shall be the
date AEE shall receive notice from the Owner Participant.
"Evergreen Renewal Term" shall have the meaning specified in
Section 15.1 of the Lease.
"Excepted Payments" shall mean and include (whether or not
constituting Supplemental Rent) (a)(i) any indemnity or other payment payable to
any of the Owner Trust, the Trustee or the Owner Participant or to their
respective Related Parties (other than the Indenture Trustee) pursuant to
Section 2.3 (Transaction Expenses), 10 (Indemnifications) or 12 (Supplemental
Financing) of the Participation Agreement and Section 5.03 or 7 of the Trust
Agreement, and any payments under the Tax Indemnity Agreement or (ii) any amount
payable by AEE to the Owner Trust, the Trustee or the Owner Participant to
reimburse any such Person for its costs and expenses in exercising its rights
under the Operative Documents, (b) (i) insurance proceeds, if any, payable to
the Owner Trust, the Trust Company, the Trustee or the Owner Participant under
insurance separately maintained by the Owner Trust, the Trustee or the Owner
Participant with respect to the Facility as permitted by Section 11.5 of the
Lease or (ii) proceeds of personal injury or property damage liability insurance
maintained under any Operative Document for the benefit of the Owner Trust, the
Trustee or the Owner Participant, (c) any amount payable to the Owner
Participant as the purchase price of the Owner Participant's Beneficial
Interest, (d) any amounts payable to the Owner Participant pursuant to Section
14 (Special Lessee Transfer) or 15 (Right of First Offer) of the Participation
Agreement, (e) all other fees expressly payable to the Trustee or the Owner
Participant under the Operative Documents and (f) any payments in respect of
interest or late charges, or any payments made on an After-Tax Basis, to the
extent attributable to payments referred to in clauses (a) through (e) above
that constitute Excepted Payments.
"Excepted Rights" shall mean the rights set forth in Section
5.6 of the Indenture as and to the extent provided therein.
"Excess Amount" shall have the meaning specified in Section
16.3 of the Participation Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934.
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"Excluded Property" shall mean Excepted Payments and Excepted
Rights, collectively.
"Excluded Taxes" shall have the meaning specified in Section
10.2(b) of the Participation Agreement.
"Exempt Wholesale Generator" shall have the meaning as defined
in Section 32 of PUHCA.
"Facility" shall mean the ▇▇▇▇▇▇▇ Station, which consists of a
coal-fired, steam turbine generating unit with a generating capacity of 675 MW
located near ▇▇▇▇▇▇, New York. The Facility is more particularly described on
Exhibit A to the Lease. The Facility does not include the Facility Site.
"Facility Assets" shall mean the Facility and the Facility
Site.
"Facility Site" shall mean the parcel of land described on
Exhibit A to the Site Lease and the Site Sublease.
"Facilities Support Agreement" shall mean the Facilities
Support Agreement, dated as of May 1, 1999, between the Lessee and the Owner
Trust.
"Fair Market Rental Value" or "Fair Market Sales Value" shall
mean with respect to any property or service as of any date, the cash rent or
cash price obtainable in an arm's-length lease, sale or supply, respectively,
between an informed and willing lessee or purchaser under no compulsion to lease
or purchase and an informed and willing lessor or seller or supplier under no
compulsion to lease or sell or supply the property or service in question, and
shall, in the case of the Undivided Interest or the Lessor's Interest, be
determined (except pursuant to Section 17 of the Lease or as otherwise provided
below or in the Operative Documents) on the basis that (a) the conditions
contained in Sections 7 and 8 of the Lease shall have been complied with in all
respects, (b) the lessee or buyer shall have rights in, or an assignment of, the
Operative Documents to which the Lessor is a party and the obligations relating
thereto, (c) the Undivided Interest or the Lessor's Interest, as the case may
be, is free and clear of all Liens (other than Lessor's Liens, Owner
Participant's Liens and Indenture Trustee Liens), (d) taking into account the
remaining term of the Site Lease, (e) in the case of the Fair Market Rental
Value, taking into account the terms of the Lease and the other Operative
Documents and (f) without taking into account the rights of the Lessee set forth
in Section 15.1 of the Participation Agreement. If the Fair Market Sales Value
of the Lessor's Interest is to be determined during the continuance of a Lease
Event of Default or in connection with the exercise of remedies by the Lessor
pursuant to Section 17 of the Lease, such value shall be
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determined by an appraiser appointed solely by the Lessor on an "as-is",
"where-is" and "with all faults" basis and shall take into account all Liens
(other than Lessor's Liens, Owner Participant's Liens and Indenture Trustee
Liens); provided, however, that in any such case where the Lessor shall be
unable to obtain constructive possession sufficient to realize the economic
benefit of the Lessor's Interest, Fair Market Sales Value of the Lessor's
Interest shall be deemed equal to $0. If in any case other than in the preceding
sentence, the parties are unable to agree upon a Fair Market Sales Value or Fair
Market Rental Value within 30 days after a request therefor has been made, the
Fair Market Sales Value or Fair Market Rental Value, as applicable, shall be
determined by appraisal pursuant to the Appraisal Procedures. Any fair market
value determination of a Severable Modification shall take into consideration
any liens or encumbrances to which the Severable Modification being appraised is
subject and which are being assumed by the transferee.
"Federal Power Act" shall mean the Federal Power Act of l935.
"FERC" shall mean the Federal Energy Regulatory Commission of
the United States or any successor or predecessor agency thereto.
"FERC AES EWG Orders" shall mean each of the following orders
issued by the FERC granting EWG status: AES Eastern Energy, L.P., Docket No. EG
99-55, issued Feb. 5, 1999; AES Creative Resources, L.P., 99-54, issued Feb. 12,
1999; AES ▇▇▇▇▇▇▇▇, L.L.C., Docket No. EG 99-60 and AES Hickling, L.L.C., Docket
No. EG99-61, each issued Feb. 18, 1999; AES ▇▇▇▇▇▇▇▇, L.L.C., Docket No.
EG99-62, AES Somerset L.L.C., EG99-63, and AES ▇▇▇▇▇▇▇▇▇ L.L.C., EG99-64, each
issued on Feb. 18; AES Cayuga L.L.C., EG99-65 issued Feb. 23, 1999 and AEE 2,
L.L.C., EG99-102 issued April 6, 1999.
"FERC Disclaimer Order" shall mean the Order issued April 6,
1999 in Docket No. EL99-37 disclaiming jurisdiction under Section 201(e) of the
Federal Power Act over the Lessor, the Trustee, and the Owner Participant.
"FERC EWG Filings" shall mean each of the filings requesting a
determination of "exempt wholesale generator" status under PUHCA made at FERC by
the twelve owner trusts in respect of the Facility and the Related Facility on
May 4, 1999, in Docket Nos. EG99-128-000 through EG ▇▇-▇▇▇-▇▇▇. The filings are
effective immediately to exempt the owner trusts from PUHCA until FERC acts on
them (within 60 days). Pending action on the EWG filings, a no-action Letter
from the SEC Office of Public Utility Regulation, dated May 11, 1999, states
that the SEC staff will not recommend enforcement action under PUHCA against the
owner trusts, owner participants or owner trustee if they participate in the
transactions as described.
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"FERC Orders" shall mean, collectively, the FERC AES EWG
Orders, the FERC EWG Filings, the FERC Section 203 Orders, the FERC Section 205
Orders and the FERC Disclaimer Order.
"FERC Section 203 Orders" shall mean the order issued by FERC
on January 29, 1999, approving the transfer of jurisdictional assets from NYSEG
to AEE, ACR, and the owner trusts, in Docket Nos. EC98-57-000 and EC99-22-000;
86 FERC paragraph 62,079 and the order issued April 9, 1999 in Docket
No. EC99-57-000, 87 FERC paragraph 62,044, approving transfer of certain
facilities to AEE 2.
"FERC Section 205 Orders" shall mean the orders issued by the
FERC on January 5, 1999 in Docket ER99-564-000, on February 17, 1999 in Docket
No. ER99-1773-000, and on March 16, 1999, in Docket No. ER99-1761-000, accepting
for filing and making effective a market-based rate tariff for AES NY, for
wholesale sales of energy and power and granting blanket approval of assumption
of liabilities under Section 204 of the Federal Power Act; granting a notice of
succession of the rate tariff and authorization to AEE and ACR; and accepting a
market-based rate tariff for selling certain ancillary services, respectively.
"Final Determination" shall have the meaning specified in
Section 8(c) of the Tax Indemnity Agreement.
"First American" shall mean First American Title Insurance
Company of New York.
"Fixed Charges" shall mean, for any relevant period, the sum,
calculated on a cash basis, of (a) all Basic Rent (other than Deferrable
Payments) paid during such period (or, in the case of any future period, as of
the time of calculation, Scheduled to be Paid) and any basic rent (other than
"Deferrable Payments") under all Other Leases and Related Leases and (b) all
Debt Service paid during such period (or, in the case of any future period, as
of the time of calculation, Scheduled to be Paid).
"FMV Renewal Term" shall have the meaning specified in Section
15.2 of the Lease.
"Fuel Consultant" shall mean ▇▇▇▇ ▇. ▇▇▇▇ Company.
"Fuel Report" shall have the meaning specified in Section 4.17
of the Participation Agreement.
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"Funding Date" shall mean the Closing Date and, thereafter,
the first Business Day of each month commencing with the month immediately
following the Closing Date.
"Funding Date Certificate" shall have the meaning specified in
Section 3.1(b) of the Depositary Agreement.
"Furnishing Party" shall have the meaning specified in Section
16.16 of the Participation Agreement.
"GAAP" shall mean generally accepted accounting principles as
used and implemented in the United States.
"Governmental Approvals" shall mean all authorizations,
consents, approvals (including regulatory approvals), waivers, exemptions,
orders, variances, franchises, permissions, permits and licenses, exceptions,
filings, notices to and declarations of, and rulings by any Governmental Entity.
"Governmental Entity" shall mean and include any federal,
state, county, municipal, foreign, international, regional or other governmental
or regulatory authority, agency, board, commission, department, division, organ,
instrumentality, court or political subdivision of any thereof.
"Ground Interest" shall have the meaning specified in the
Recitals to the Site Lease and the Site Sublease.
"Ground Lease Easements" shall have the meaning specified in
the recitals to the Site Lease.
"Ground Lease Easement Areas" shall have the meaning specified
in the recitals to the Site Lease.
"Ground Lessee" shall mean the Owner Trust as lessee of the
Ground Interest under the Site Lease.
"Ground Lessor" shall mean AEE as lessor of the Ground
Interest under the Site Lease.
"Ground Sublessee" shall mean AEE as sublessee of the Ground
Interest under the Site Sublease.
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119
"Ground Sublessor" shall mean the Owner Trust as sublessor of
the Ground Interest under the Site Sublease.
"Hazardous Substance" shall mean any pollutant, contaminant,
hazardous substance, hazardous waste, toxic substance, petroleum or
petroleum-derived substance or waste, or additive, asbestos, PCBs, radioactive
material, or other compound, element, material or substance in any form
whatsoever (including, without limitation, products) regulated, restricted or
controlled by or under any Environmental Law.
"Indebtedness" of any Person shall mean (a) all indebtedness
of such Person for borrowed money, including, in the case of AEE, the Working
Capital Facility, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Lease Obligations of such Person (including, in the case of AEE, all Rent
under the Lease and all rent under all Other Leases and Related Leases), (f) all
obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar facilities, (g) all unconditional obligations of such Person
to purchase, redeem, retire, defease or otherwise acquire for value any capital
stock or other equity interests of such Person or any warrants, rights or
options to acquire such capital stock or other equity interests, (h) all
Indebtedness of any other Person of the type referred to in clauses (a) through
(g), guaranteed by such Person or for which such Person shall otherwise
(including pursuant to any keepwell, makewell or similar arrangement) become
directly or indirectly liable, and (i) all Indebtedness of the type referred to
in clauses (a) through (g) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property (including, without limitation, accounts and contracts
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, the amount of such obligation being
deemed to be the lesser of the value of such property or the amount of the
obligation so secured.
"Indemnitee" shall have the meaning specified in Section
10.1(a) of the Participation Agreement.
"Indemnity Account" shall have the meaning set forth in
Section 2.2 of the Depositary Agreement.
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"Indenture" shall mean the Indenture of Trust and Security
Agreement (▇▇▇▇▇▇▇ A-1), dated as of May 1, 1999, between the Owner Trust and
the Indenture Trustee.
"Indenture Bankruptcy Default" shall mean any event or
occurrence, which, with the passage of time or the giving of notice or both,
would become an Indenture Event of Default under Section 4.1(e) or (f) of the
Indenture.
"Indenture Default" shall mean any event or occurrence which,
with the passage of time or the giving of notice or both, would become an
Indenture Event of Default.
"Indenture Estate" shall have the meaning specified in the
Granting Clause of the Indenture.
"Indenture Event of Default" shall have the meaning specified
in Section 4.1 of the Indenture.
"Indenture Payment Default" shall mean any event or
occurrence, which, with the passage of time or the giving of notice or both,
would become an Indenture Event of Default under Section 4.1(b) of the
Indenture.
"Indenture Trustee" shall mean Bankers Trust Company, not in
its individual capacity, but solely as Indenture Trustee under the Indenture,
and each other Person which may from time to time be acting as Indenture Trustee
in accordance with the provisions of the Indenture.
"Indenture Trustee's Liens" shall mean any Lien on the Trust
Estate or any part thereof arising as a result of (a) Claims against, or caused
by any act or omission of, the Lease Indenture Company or any Affiliate thereof
that is not related to, or that is in violation of, any Operative Document or
the transactions contemplated thereby or that is in breach of any covenant or
agreement of the Lease Indenture Company specified therein, (b) Taxes imposed
upon the Lease Indenture Company or any Affiliate thereof that are not
indemnified against by AEE pursuant to any Operative Document or (c) Claims
against or affecting the Indenture Trustee or any Affiliate thereof arising out
of the voluntary or involuntary transfer by the Indenture Trustee of any portion
of the interest of the Indenture Trustee in the Trust Estate, other than
pursuant to the Operative Documents.
"Indenture Trustee Office" shall mean the office to be used
for notices to the Indenture Trustee from time to time pursuant to Section 9.5
of the Indenture.
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"Indenture Trustee's Account" shall mean the account for the
Indenture Trustee identified on Definitions Schedule 1 or such other account as
the Indenture Trustee may from time to time specify in a notice to the
Transaction Parties pursuant to Section 16.5 of the Participation Agreement.
"Independent Appraiser" shall mean a disinterested, licensed
industrial property appraiser who is a member of the Appraisal Institute or the
American Society of Appraisers having experience in the business of evaluating
facilities similar to the Facility.
"Independent Engineer" shall mean Stone & ▇▇▇▇▇▇▇ Engineering
Corporation or such other nationally recognized engineering consulting firm as
AEE and the Owner Participant shall reasonably designate.
"Independent Forecast" shall have the meaning specified in
Section 5.17 of the Participation Agreement.
"Ineligible Transferee" shall mean (a) a Competitor or any
Affiliate thereof or (b) any six Persons (each such Person shall include all
Affiliates thereof) set forth on a list provided by AEE to the Owner Participant
pursuant to Section 5.3(c) of the Participation Agreement on not more than one
occasion during any calendar year during the Lease Term; provided, however, that
such list shall not include any Eligible Transferee.
"Initial Eligible Transferee" shall mean those Persons set
forth in Schedule 8.1(b) to the Participation Agreement, which list sets forth
the Persons to which the Owner Participant can transfer all or any portion of
its Beneficial Interest within 12 months following the Closing Date.
"Initial Evergreen Renewal Termination Date" shall have the
meaning specified in Section 15.1(a) of the Lease.
"Initial Purchasers" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, Credit Suisse First Boston Corporation and CIBC ▇▇▇▇▇▇▇▇▇▇▇ World
Markets Corp.
"Insurance Consultant" shall mean Aon Risk Services of Texas,
Inc.
"Interconnection Agreement" shall mean the Interconnection
Agreement between NYSEG and AES NY, under which NYSEG will provide AES NY with
interconnection service to certain of its transmission facilities as set forth
in the Asset Purchase Agreement.
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"Interim Term Rent" shall have the meaning specified in
Section 3.3 of the Lease.
"Investment" shall mean the acquisition of any interest in any
Person or property, a loan or advance to any Person or other arrangement for the
purpose of providing funds or credit to any Person, a capital contribution in or
to any Person, or any other investment in any Person or property.
"Investment Banker" shall have the meaning specified in
Section 2.10(d) of the Indenture.
"Investment Company Act" shall mean the Investment Company Act
of 1940.
"Investment Grade" shall mean a credit rating of not less than
Baa3 by Moody's and BBB- by S&P.
"IRS" shall mean the Internal Revenue Service of the United
States, Department of Treasury or any successor agency.
"LC Provider" shall mean a financial institution (a) whose
long term unsecured debt is rated no lower than A3 by Moody's and A- by S&P and
(b) whose provision of the Additional Liquidity Letter of Credit does not cause
any Owner Participant's credit exposure limits to such financial institution to
be exceeded.
"Lead Underwriter" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated.
"Lease" shall mean the Facility Lease Agreement (▇▇▇▇▇▇▇ A-1),
dated as of May 1, 1999, between the Lessor and the Lessee.
"Lease Bankruptcy Default" shall mean any event that is, or
with the passage of time or the giving of notice would become, a Lease Event of
Default under clause (g) or (h) of Section 16 of the Lease.
"Lease Basic Term" shall have the meaning specified in Section
3.2 of the Lease.
"Lease Debt Rate" shall mean the interest rate under the
applicable Lessor Note.
"Lease Event of Default" shall have the meaning specified in
Section 16 of the Lease.
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"Lease Expiration Date" shall mean the date set forth on
Definitions Schedule 1.
"Lease Financing" shall mean the transactions contemplated by
the Operative Documents.
"Lease Fixed Term" shall mean the Lease Basic Term and the
Lease Interim Term.
"Lease Indenture Company" shall mean Bankers Trust Company, a
New York banking corporation, in its individual capacity under the Operative
Documents.
"Lease Interim Term" shall have the meaning specified in
Section 3.1 of the Lease.
"Lease Material Default" shall mean (a) an event that is, or
with the passage of time or the giving of notice would become, a Lease Event of
Default under clause (a) or (b) of Section 16 of the Lease or (b) any Lease
Bankruptcy Default.
"Lease Obligations" shall mean, without duplication, (a)
Indebtedness represented by obligations under a lease that is required to be
capitalized for financial reporting purposes and (b) with respect to noncapital
leases of electric generating facilities, (i) non-recourse Indebtedness of the
lessor in such a lease, or (ii) if such amount is indeterminable, then the
present value, determined using a discount rate equal to the incremental
borrowing rate (as defined in SFAS No. 13) of the lessee under such a lease, of
rent obligations under such lease.
"Lease Term" shall mean the term of the Lease, including the
Lease Interim Term, the Lease Basic Term and all Renewal Terms.
"Lender's Policy" shall mean, collectively, the Leasehold
Lender's Policy of title insurance No. 135NYT25343-5 issued by First American
dated the Closing Date and the Leasehold Lender's Policy of title insurance No.
9915-25003 issued by Chicago Title dated the Closing Date in the aggregate
amount of $374,842,392.11, insuring the Indenture Trustee's interest under the
Indenture and the Other Indentures, subject only to Permitted Encumbrances.
"Lessee" shall mean AEE, as lessee under the Lease.
"Lessee Liens" shall mean any Liens on the Facility, the
Undivided Interest, the Facility Site, the Related Facility, the Related
Facility Site or the Additional
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Facilities, other than Permitted Liens and Liens on the Additional Facilities in
respect of Permitted Secured Indebtedness.
"Lessee's General Partner" shall mean AES NY.
"Lessee's Interest" shall mean the Lessee's right, title and
interest in and to (a) the Undivided Interest under the Lease and (b) the Ground
Interest under the Site Sublease.
"Lessor" shall mean the Owner Trust, as lessor under the
Lease.
"Lessor Notes" shall have the meaning specified in Section 2.2
of the Indenture.
"Lessor's Account" shall mean the account for the Lessor
identified on Definitions Schedule 1, or such other account as the Lessor may
from time to time specify in a notice to the Transaction Parties pursuant to
Section 16.5 of the Participation Agreement.
"Lessor's Interest" shall mean the Lessor's right, title and
interest in and to the Undivided Interest and the Ground Interest under the Site
Lease.
"Lessor's Lien" shall mean any Lien on the Trust Estate or any
part thereof arising as a result of (a) Claims against or any act or omission of
the Owner Trust that are not related to, or that is in violation of, any
Operative Document or the transactions contemplated thereby or that is in breach
of any covenant or agreement of the Owner Trust specified therein, (b) Taxes
imposed upon the Owner Trust that are not indemnified against by AEE pursuant to
any Operative Document or (c) Claims against or affecting the Owner Trust
arising out of the voluntary or involuntary transfer by the Owner Trust of any
portion of the Owner Trust's Interest, other than pursuant to the Operative
Documents.
"Lessor's Percentage" shall mean the percentage specified on
Definitions Schedule 1.
"Lien" shall mean any mortgage, security deed, security title,
pledge, lien, charge, encumbrance, lease, and security interest or title
retention arrangement.
"Lien of the Indenture" shall mean the Lien of the Indenture
Trustee on the Indenture Estate and shall include the Lien of the Mortgage.
"Loans" shall mean the loans evidenced by the Lessor Notes.
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"Loss Proceeds Account" shall have the meaning set forth in
Section 2.2 of the Depositary Agreement.
"Majority in Interest of Noteholders" as of any date of
determination, shall mean Noteholders holding in aggregate more than 50% of the
total outstanding principal amount of the Notes; provided, however, that any
Note held by the Lessee or any Affiliate of the Lessee shall not be considered
outstanding for purposes of this definition unless the Lessee or any Affiliate
thereof shall hold title to all the Notes outstanding.
"Make-Whole Premium" shall mean an amount equal to the
Discounted Present Value (defined below) calculated for any Note subject to
redemption pursuant to the Indenture less the unpaid principal amount of such
Note; provided, that the Make-Whole Premium shall not be less than zero. For
purposes of this definition, the "Discounted Present Value" of any Note subject
to redemption pursuant to the Indenture shall be equal to the discounted present
value of all principal and interest payments scheduled to become due in respect
of such Note after the date of such redemption, calculated using a discount rate
equal to the sum of (a) the yield to maturity on the U.S. Treasury security
having an average life equal to the remaining average life of such Note and
trading in the secondary market at the price closest to par and (b) 50 basis
points; provided, however, that if there is no U.S. Treasury security having an
average life equal to the remaining average life of such Note, such discount
rate shall be calculated using a yield to maturity interpolated or extrapolated
on a straight-line basis (rounding to the nearest basis point, if necessary)
from the yields to maturity for two U.S. Treasury securities having average
lives most closely corresponding to the remaining average life of such Note and
trading in the secondary market at the price closest to par.
"Market Certification" shall mean, as to any Affiliate
Transaction, a certificate issued by a Responsible Officer of AEE that the terms
of such Affiliate Transaction are no less favorable than those which AEE would
obtain in a comparable transaction entered into on an arm's-length basis with a
party that is not an Affiliate of AEE.
"Market Consultant" shall mean London Economics, Inc.
"Market Report" shall mean the report of the Market
Consultant, dated March 29, 1999.
"Material Adverse Effect" shall mean a material adverse effect
on the financial position, property, results of operations or business of the
Lessee (on a consolidated basis) including a material adverse effect on (a) the
Lessor's Interest, the Ground Interest, the Facility, the Facility Site or any
other Assigned Assets or (b) the
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financial position of the Lessee (on a consolidated basis) affecting the ability
of the Lessee to perform its obligations in any respect under any of the
Operative Documents or (c) the validity or enforceability of any Operative
Document.
"Material Agreement" shall mean any of those contracts,
agreements, or other documents, other than the Operative Documents, to which AEE
or any of the AEE Entities is a party or is otherwise bound, pursuant to which
the occurrence of a default or event of default or a breach thereunder could
reasonably be expected to result in a Material Adverse Effect.
"Memorandum of Lease" shall mean the Memorandum of Lease,
dated as of May 1, 1999, between the Lessor and the Lessee and filed with the
applicable county clerk.
"Memorandum of Site Lease" shall mean the Memorandum of Site
Lease, dated as of May 1, 1999, between the Ground Lessor and the Ground Lessee
and filed with the applicable county clerk.
"Memorandum of Site Sublease" shall mean the Memorandum of
Site Sublease, dated as of May 1, 1999, between the Ground Sublessor and the
Ground Sublessee and filed with the applicable county clerk.
"Modification" shall mean (a) any addition, alteration,
improvement, betterment or enlargement of the Facility including any Required
Modifications or Optional Modifications, but excluding Components, (b) any
repowering of the Facility and (c) any other improvements to the Facility which
may increase its capacity.
"Modified Make-Whole Premium" means an amount equal to the
Discounted Present Value (defined below) calculated for any Note subject to
redemption pursuant to the Indenture less the unpaid principal amount of such
Note; provided, that the Modified Make-Whole Premium shall not be less than
zero. For purposes of this definition, the "Discounted Present Value" of any
Note subject to redemption pursuant to the Indenture shall be equal to the
discounted present value of all principal and interest payments scheduled to
become due in respect of such Note after the date of such redemption, calculated
using a discount rate equal to the sum of (a) the yield to maturity on the U.S.
Treasury security having an average life equal to the remaining average life of
such Note and trading in the secondary market at the price closest to par and
(b) 100 basis points; provided, however, that if there is no U.S. Treasury
security having an average life equal to the remaining average life of such
Note, such discount rate shall be calculated using a yield to maturity
interpolated or extrapolated on a straight-line basis (rounding to the nearest
basis point, if necessary) from the yields to maturity for two U.S. Treasury
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securities having average lives most closely corresponding to the remaining life
of such Note and trading in the secondary market at the price closest to par.
"Monthly Operations Report" shall mean a monthly operations
report in the form attached as Schedule 5.3(f) to the Participation Agreement.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage" shall mean the Mortgage, Assignment of Leases and
Security Agreement (▇▇▇▇▇▇▇ A-1), dated as of May 1, 1999 between the Owner
Trust, as Mortgagor, and the Indenture Trustee, as Mortgagee.
"Mortgaged Property" shall have the meaning specified in the
granting clause of the Mortgage.
"Mortgagee" shall mean the Indenture Trustee as Mortgagee
under the Mortgage.
"NEPOOL" shall mean the New England Power Pool.
"NGE" shall mean NGE Generation, Inc., a New York corporation.
"Nonseverable Modifications" shall mean, with respect to the
Facility, the Related Facility or either of the Additional Facilities, any
Modification that is not readily removable without causing material damage to
such facility.
"Note Register" shall have the meaning specified in Section
2.8 of the Indenture.
"Noteholder" shall mean any holder from time to time of a Note
outstanding.
"Notes" shall mean any Lessor Notes and Additional Lessor
Notes issued pursuant to the Indenture.
"NYPP" shall mean the New York Power Pool.
"NYSEG" shall mean New York State Electric & Gas Corporation,
a New York corporation.
"Obsolescence Termination Date" shall have the meaning
specified in Section 14.1 of the Lease.
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"Obsolete Component" shall have the meaning specified in
Section 7.2(c) of the Lease.
"Offering Circular" shall mean the Offering Circular, dated
May 11, 1999, with respect to the Pass Through Certificates.
"Officer's Certificate" shall mean with respect to any Person,
a certificate signed (a) in the case of a corporation, by the Chairman of the
Board, the President, or a Vice President of such Person or any Person
authorized by or pursuant to the organizational documents, the by-laws or any
resolution of the Board of Directors or Executive Committee of such Person
(whether general or specific) to execute, deliver and take actions on behalf of
such Person in respect of any of the Operative Documents, (b) in the case of a
partnership, by the Chairman of the Board of Directors, the President, any Vice
President, the Treasurer or an Assistant Treasurer of a corporate general
partner, (c) in the case of a limited liability company, by any member or
manager authorized by or pursuant to its limited liability company agreement,
and (d) in the case of the Trustee or Indenture Trustee, by a Responsible
Officer of such Trustee or Indenture Trustee.
"Operating Account" shall have the meaning set forth in
Section 2.2 of the Depositary Agreement.
"Operating and Maintenance Costs" shall mean, for any period,
all cash operating and maintenance expenses of AEE or any AEE Subsidiary in
respect of the Facility, the Related Facility, the Additional Facilities or any
other assets or property of AEE or any AEE Subsidiary for such period,
calculated in accordance with cash accounting, including, without limitation,
amounts owed under the Coal Hauling Agreement, interest payable pursuant to the
Working Capital Facility or any successor facility, the fees set forth in the
Operation and Maintenance Agreements, capital expenditures (made or, in the case
of any future period duly budgeted pursuant to Section 5.9 of the Participation
Agreement, including all costs of major inspections, unscheduled or scheduled
major maintenance of the Facility, Related Facility or any Additional Facility
and all work on account of extraordinary equipment failures and contingencies
(including overhaul costs)), insurance premiums, payments due in respect of
property or sales taxes, consumables, labor costs, costs incurred under any
contracts for the purchase, transportation or handling of fuel and any options
related thereto, costs incurred with regard to disposal of ash or any products
generated by the Facility, the Related Facility or the Additional Facilities and
general and administrative expenses and maintenance costs with regard to the
Facility, the Related Facility or the Additional Facilities and any other assets
or property of any AEE Subsidiary, but excluding Fixed Charges in all such
cases, in each case attributable to such period. For the avoidance of doubt,
Operating and Maintenance Costs shall not include income taxes, the costs under
the EPC Contract for
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the construction and installation of the SCR or any transaction expenses
associated with the Acquisition or the Lease Financing paid in 1999.
"Operation and Maintenance Agreements" shall mean (a) the
Operation and Maintenance Agreement, dated as of May 1, 1999, between AEE and
AES Somerset, L.L.C., (b) the Operation and Maintenance Agreement, dated as of
May 1, 1999, between AEE and AES Cayuga, L.L.C., (c) the Operation and
Maintenance Agreement, dated as of May 1, 1999, between AEE and AES ▇▇▇▇▇▇▇▇,
L.L.C., and (d) the Operation and Maintenance Agreement, dated as of May 1,
1999, between AEE and AES ▇▇▇▇▇▇, L.L.C.
"Operative Documents" shall mean the Participation Agreement,
the Deed, the ▇▇▇▇ of Sale, the Lease, the Memorandum of Lease, the Site Lease,
the Memorandum of Site Lease, the Site Sublease, the Memorandum of Site
Sublease, the Indenture, the Depositary Agreement, the Mortgage, the Assignment
of Leases, the Lessor Notes, the Pass Through Trust Agreements, the Pass Through
Certificates, the Trust Agreement, the Owner Participant Parent Guaranty, the
Tax Indemnity Agreement and the Facilities Support Agreement.
"Optional Modification" shall have the meaning specified in
Section 8.2 of the Lease.
"Other Indenture" shall mean each other "Indenture of Trust
and Security Agreement" relating to an Other Lease.
"Other Lease" shall mean each other "Facility Lease Agreement"
relating to the lease of the other undivided ownership interests in the Facility
not conveyed to the Owner Trust under the ▇▇▇▇ of Sale and the Deed, all on
substantially the same terms and conditions as under, and dated the same date
as, the Lease.
"Other Lessor" shall mean a lessor with respect to any Other
Lease.
"Other Mortgage" shall mean each "Mortgage" relating to the
mortgage of the mortgaged property of the Facility by the Other Lessor in favor
of the Indenture Trustee under an Other Indenture, all on substantially the same
terms and conditions as under, and dated the same date, as the Mortgage.
"Other Operative Documents" shall mean each other "Operative
Document" relating to an Other Lease or a Related Lease.
"Other Owner Participant" shall mean an owner participant with
respect to any Other Leases.
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"Overdue Rate" shall mean with respect to all Rent the higher
of (i) the Prime Rate plus 2% and (ii) the highest rated series of the Pass
Through Certificates (issued on the Closing Date), (such higher rate being
herein referred to as the "Regular Overdue Rate"); provided, however, (A) with
respect to Deferrable Payments, such rate shall mean the higher of (x) the Prime
Rate and (y) the Deferrable Basic Rent Accrual Rate, in each case plus 2% and
(B) with respect to any indemnity payable to the Owner Trust or the Owner
Participant (or its Related Parties) pursuant to Section 10 of the Participation
Agreement or pursuant to the Tax Indemnity Agreement, such rate shall mean (I)
the Regular Overdue Rate during the first 30 days such indemnity payment is
overdue, (II) the Deferrable Basic Rent Accrual Rate from and including the day
following such 30-day period to but excluding the date a Lease Event of Default
under Section 16(b) of the Lease shall have occurred as a result of the failure
of AEE to make such indemnity payment and (III) the Regular Overdue Rate at any
time following the date such Lease Event of Default shall have occurred.
"Owner Participant" shall mean DCC Project Finance Fourteen,
Inc., a Delaware corporation.
"Owner Participant Guaranty" shall mean the Owner Participant
Parent Guaranty of ▇▇▇▇ Commercial Credit Corporation dated as of the Closing
Date.
"Owner Participant Parent Guaranty" shall mean, as applicable,
the Owner Participant Guaranty or a guaranty by a parent of the Owner
Participant, reasonably satisfactory to AEE and, so long as the Lien of the
Indenture shall not have been terminated or discharged, to the Indenture
Trustee, substantially in the form of Exhibit B to the Participation Agreement.
"Owner Participant Transferee" shall have the meaning
specified in Section 8.1(a) of the Participation Agreement.
"Owner Participant's Account" shall mean the account for the
Owner Participant identified on Definitions Schedule 1, or such other account as
the Owner Participant may from time to time specify in a notice to the
Transaction Parties pursuant to Section 16.5 of the Participation Agreement.
"Owner Participant's Commitment" shall mean the Owner
Participant's investment in the Lessor contemplated by Section 2.1(a) of the
Participation Agreement.
"Owner Participant's Lien" shall mean any Lien on the Trust
Estate or any part thereof arising as a result of (a) Claims against or any act
or omission of the Owner Participant that are not related to, or that are in
breach of, any Operative Document or the
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transactions contemplated thereby or that are in violation of any covenant or
agreement of the Owner Participant set forth therein, (b) Taxes against the
Owner Participant that are not indemnified against by AEE pursuant to the
Operative Documents or (c) Claims against or affecting the Owner Participant
arising out of the voluntary or involuntary transfer by the Owner Participant
(except as contemplated or permitted by the Operative Documents) of any portion
of the Beneficial Interest.
"Owner Participant's Net Economic Return" shall mean the Owner
Participant's anticipated (a) net after-tax yield (calculated according to the
multiple investment sinking fund method of analysis), and (b) aggregate
after-tax cash flow and GAAP income.
"Owner Trust" shall mean the ▇▇▇▇▇▇▇ Facility Trust A-1.
"Owner Trust's Policy" shall mean, collectively, the Leasehold
Owner's Policy of title insurance No. 135NYT25343-5 issued by First American
dated the Closing Date, and that Site Leasehold Owner's Policy of title
insurance No. 9915-25003 issued by Chicago Title dated the Closing Date in the
aggregate amount of $94,910,607.89, insuring the Owner Trust's undivided
leasehold interest as tenant under the Site Lease and fee interest in the
Facility, subject only to Permitted Encumbrances.
"Participation Agreement" or "Agreement" shall mean the
Participation Agreement (▇▇▇▇▇▇▇ A-1), dated as of May 1, 1999, among AEE, the
Owner Trust, the Owner Participant, and Bankers Trust Company, as Indenture
Trustee and as Pass Through Trustees.
"Pass Through Certificates" shall mean the pass through
certificates issued pursuant to the Pass Through Trust Agreements.
"Pass Through Trust Agreements" shall mean one or more, as the
context may require, of (a) the Pass Through Trust Agreement A, dated as of May
1, 1999, and (b) the Pass Through Trust Agreement B, dated as of May 1, 1999, in
each case between AEE and a Pass Through Trustee.
"Pass Through Trustees" shall mean Bankers Trust Company, a
New York banking corporation, not in its individual capacity, except to the
extent expressly provided in any Pass Through Trust Agreement or the other
Operative Documents, but solely as Pass Through Trustee under each of the Pass
Through Trust Agreements, and each other Person which may from time to time be
acting as a Pass Through Trustee in accordance with the provisions of a Pass
Through Trust Agreement.
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"Pass Through Trusts" shall mean each of the pass through
trusts created pursuant to the Pass Through Trust Agreements.
"Paying Agent" shall have the meaning specified in Section 2.6
of the Indenture.
"Payment Event" shall mean (a) the occurrence on any Rent
Payment Date or 5 Business Days thereafter of the aggregate amounts then
available to be withdrawn from the Rent Payment Account, the Additional
Liquidity Account, the Special Rent Reserve Account and the Rent Reserve Account
(excluding amounts available to be paid under any Rent Reserve Account Payment
Undertaking Agreement), less the portion of the amount in the Additional
Liquidity Account, the Rent Reserve Account and the Special Rent Reserve Account
which is required to fund any shortfall in the Debt Repayment Account, being
insufficient to pay Basic Rent (other than Deferrable Payments) due on such Rent
Payment Date, or (b) the occurrence and continuance of a Lease Event of Default
and the exercise by the Lessor of the remedy specified in Section 17.1(e) of the
Lease, or (c) the occurrence of any Termination Date on which the Lessee is
obligated to pay Termination Value.
"Payment Undertaking Agreement" shall mean an agreement (a)
between AEE, the Owner Trust and each other or related "Owner Trust" and a PUA
Provider, (b) that is drawable and payable in the event that a Payment Event
shall have occurred and be continuing, (c) the benefits of which are assigned to
each Indenture Trustee (so long as the Lessor Notes issued pursuant to the
Indenture remain outstanding), and (d) pursuant to which such PUA Provider
shall, upon the occurrence of any Payment Event, be obligated to pay on demand
an amount up to the amount set forth in a schedule attached thereto. For
purposes hereof, the amounts on such schedule, at any time, shall be at least
equal to, in the case of the Rent Reserve Account Payment Undertaking Agreement,
the maximum semi-annual payment of Basic Rent (other than Deferrable Payments)
Scheduled to be Paid on any Rent Payment Date in the immediately succeeding
three-year period and, in the case of the Special Rent Reserve Account Payment
Undertaking Agreement, (i) prior to the fifth anniversary of the Closing Date,
(A) the maximum aggregate payment of Basic Rent (other than Deferrable Payments)
expected to become due on any three successive payment dates in the immediately
succeeding three-year period minus (B) the amount set forth in clause (a) of the
definition of the Rent Reserve Account Required Balance, or (ii) after the fifth
anniversary of the Closing Date, (A) the maximum aggregate payment of Basic Rent
(other than Deferrable Payments) expected to become due on any two successive
Basic Rent payment dates in the immediately succeeding three-year period minus
(B) the amount set forth in clause (a) of the definition of the Rent Reserve
Account Required Balance; provided, however, that for purposes of this
definition, Basic Rent due on January 2, 2000 shall be calculated as the product
of (x)
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78.9% and (y) Basic Rent (other than Deferrable Payments) payable on January 2,
2000. In any event, any payment undertaking agreement that has terms and
conditions substantially similar to the Rent Reserve Account Payment Undertaking
Agreement in effect on the Closing Date shall be a Payment Undertaking
Agreement.
"Permitted Affiliate Transaction" shall mean the transactions
contemplated by the Coal Hauling Agreement and the Operation and Maintenance
Agreements and any other Affiliate Transaction (a) with respect to (i) the sale
of emission allowances for cash, at fair market value and on market terms, so
long as AEE has provided the Owner Participant with a Market Certification and
such certification is supported by a letter from a qualified independent broker
selected by AEE confirming the reasonableness thereof, (ii) the sale or lease of
the Additional Land at fair market value, so long as AEE has provided the Owner
Participant with a Market Certification prior to such event and (iii) the sale
of any part of the Assigned Assets (other than those described in clause (i) or
(ii) above), so long as the Owner Participant shall have consented (in its sole
discretion) to such sale in writing and, in respect of the Additional
Facilities, the Indenture Trustee (so long as the Lien of the Indenture shall
not have been terminated or discharged) shall have consented to such sale in
writing, or (b) in the ordinary course of business (I) for a term of less than
two years (with regard to any single transaction or any related series of
transactions in the aggregate) and which does not provide for any advance
payment to such other Person or (II) with respect to which (1) AEE shall have
provided the Owner Participant with a Market Certification and (2) if the
aggregate value of all Affiliate Transactions contemplated by clause (I) and
(II) of this definition then in effect is (x) greater than or equal to 10% of
the Annual Revenue Amount, such Market Certification is supported by a letter
from a qualified independent consultant selected by AEE (and reasonably
satisfactory to the Owner Participant) confirming the reasonableness thereof and
(y) greater than or equal to 33% of the Annual Revenue Amount, the Owner
Participant shall have consented thereto in writing. For the purposes of this
definition, "Annual Revenue Amount" shall mean, at any given time, AEE Revenues
less any AEE Extraordinary Revenues during the immediately preceding 12-month
period.
"Permitted Contest" shall mean any contest which does not
cause (a) any material risk of the foreclosure, sale, forfeiture or loss of, or
imposition of a Lien on the Facility, the Facility Site, the Undivided Interest,
the Related Facility, the Related Facility Site, the Additional Facilities, the
Trust Estate or any material part thereof, (b) any risk of the imposition of any
material penalty, charge, fine or sanction on any non-contesting Transaction
Party or on any of its Related Parties, (c) any material risk of subjecting any
non-contesting Transaction Party, or on any of its Related Parties, to material
civil liability, (d) any risk of any criminal liability being imposed on or
causing any material adverse effect on such Transaction Party or on any of its
Related Parties (it being
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understood that no Claim shall be compromised by the party contesting such claim
on a basis that admits any criminal violation or gross negligence or willful
misconduct on the part of such Transaction Party, without the express written
consent of such party), or (e) any risk of subjecting any non-contesting
Transaction Party or any of its Related Parties to a regulation as a public
utility under Applicable Law.
"Permitted Encumbrances" shall mean all matters shown as
exceptions on Schedule B to each of the Title Policies as in effect on the
Closing Date.
"Permitted Indebtedness" shall mean any of the following:
(a) trade accounts payable (other than for money borrowed) and
expenses incurred in the ordinary course of business, and for which
payments are made within 90 days of the delivery of goods or services
performed;
(b) Indebtedness relating to Required Modifications to the
Facility, the Related Facility or the Additional Facilities, provided,
that, at the time of incurrence of such Indebtedness, (i) no Lease
Bankruptcy Default or Lease Event of Default shall have occurred and be
then continuing, or would occur as a result of such Indebtedness; (ii)
the Lessee shall have consulted with the Independent Engineer regarding
the necessity, scope and cost of such Required Modifications, (iii) the
Lessee shall have certified to the Independent Engineer and the
Indenture Trustee that such Required Modifications, are required (in
both scope and amount) to enable the Facility, the Related Facility or
the Additional Facilities (as the case may be ) to comply with
Applicable Law; and (iv) after giving effect to the incurrence of such
Permitted Indebtedness, (1) during a PPA Term, the average projected
Pro Forma Coverage Ratio shall not be less than 1.6 to 1.0 (with a
minimum Pro Forma Coverage Ratio of 1.3 to 1.0) and (2) prior to and
after any such PPA Term, (x) the minimum projected Coverage Ratio for
the next two successive semi-annual periods and for each fiscal year
for the remaining Lease Term will not be less than 2.0 to 1.0 and (y)
the average projected Coverage Ratio will not be less than 2.5 to 1.0
for the remaining Lease Term;
(c) Indebtedness relating to Severable Modifications and
Nonseverable Modifications to the Facility, the Related Facility or to
the Additional Facilities, provided, that, at the time of incurrence of
such Indebtedness, (i) no Lease Bankruptcy Default or Lease Event of
Default shall have occurred and be then continuing or would occur as a
result of such Indebtedness, (ii) after giving effect to the incurrence
of such Indebtedness, (1) during a PPA Term, (x) the average projected
Pro Forma Coverage Ratio shall not be less than (aa) 2.0 to 1.0 for (I)
Severable Modifications to the Facility or the Related Facility and
(II) Severable
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Modifications and Nonseverable Modifications to the Additional
Facilities and (bb) 1.75 to 1.0 for Nonseverable Modifications to the
Facility and the Related Facility and (y) the minimum projected Pro
Forma Coverage Ratio shall not be less than (aa) 1.75 to 1.0 for (I)
Severable Modifications to the Facility or the Related Facility and
(II) Severable and Nonseverable Modifications to the Additional
Facilities and (bb) 1.6 to 1.0 for Nonseverable Modifications to the
Facility or the Related Facility and (2) prior to and after any such
PPA Term, the minimum projected Pro Forma Coverage Ratio for the next
two successive semi-annual periods and for each fiscal year for the
remaining Lease Term shall not be less than 2.25 to 1.0, and (y) the
average projected Coverage Ratio will not be less than 2.75 to 1.0, and
(iii) the Rating Agencies have confirmed in writing that there will be
no rating downgrade of the Pass Through Certificates as a result of
this Indebtedness being incurred below that then in effect but in no
event below that in effect on the Closing Date);
(d) Indebtedness of not more than $100,000,000; provided, that
not more than $75,000,000 of such Indebtedness shall include Permitted
Working Capital Indebtedness and not more than $50,000,000 of such
Indebtedness shall include Permitted Secured Indebtedness; provided,
further, that not more than $25,000,000 of such Indebtedness (secured
or unsecured) may be other than Permitted Working Capital Indebtedness
and that all such Indebtedness shall be incurred for the direct benefit
of AEE;
(e) Permitted Subordinated Indebtedness; and
(f) all Rent under the Lease and all rent under all Other
Leases and Related Leases.
"Permitted Investments" shall mean:
(I) any Payment Undertaking Agreement or
(II) short-term senior debt instruments or certificates of
deposit which meet the following criteria:
(a) the issuer, guarantor or deposit-taking institution has
senior unsecured debt ratings of A2 or better from Moody's or A or
better from S&P or the securities purchased are rated (i) A1 or better
by S&P and P1 or better by Moody's, in the case of a financial
institution issuing a bankers acceptance, commercial paper or a
certificate of deposit; (ii) A1 or better by S&P or P1 or better by
Moody's, in the case of money market or bond funds; or (iii) A or
better
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by Moody's or A2 or better by S&P, for all other forms of investments,
provided, that the obligor is not AES or any of its Affiliates; and
(b) have a remaining term to maturity of the shorter of (i)
180 days, or (ii) the date upon which a payment is anticipated to be
required to be made out of such proceeds from such Account, or
(III) money market mutual funds (including money market funds
or money market mutual funds for which the Depositary Agent in its individual
capacity or any of its Affiliates is investment manager or advisor or from which
the Depositary Agent in its individual capacity or any of its Affiliates charges
or collects fees and expenses for services rendered) registered under the
Investment Company Act, having a rating in the highest investment category by
S&P and Moody's.
"Permitted Liens" shall mean the following:
(a) Liens for (i) taxes not yet due and payable or (ii) taxes
being contested in good faith by a Permitted Contest, if adequate cash
reserves for such taxes have been established and are being maintained
in accordance with GAAP
(b) Suppliers', vendors', workmen's, repairmen's, employee's,
mechanics', materialmen's or other like Liens arising in the ordinary
course of business for amounts the payment of which is either not yet
delinquent or is being contested in good faith by a Permitted Contest
and the Lessee shall maintain cash reserves for the discharge of such
Lien in accordance with GAAP;
(c) Pre-judgment Liens for claims against the Lessee or any
sublessee permitted under the Lease which are contested in good faith
and liens arising out of judgments or awards against the Lessee or any
such sublessee with respect to which an appeal or proceeding for review
is being prosecuted in good faith and to which a stay of execution has
been obtained pending such appeal or review; provided, however, that
the Lessee shall post a bond or other surety obligation, in form, scope
and substance satisfactory to the Lessor, for any judgment default in
excess of $5 million;
(d) Easements, servitudes, covenants, conditions, restrictions
and land charges in respect of the Facility, the Related Facility or
any of the Additional Facilities which do not have a material adverse
effect on the current or residual value, useful life or utility of the
Facility, the Related Facility or any of the Additional Facilities;
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(e) Liens created or expressly permitted by any Operative
Document or any Other Operative Document, including without limitation,
the Lien of the Indenture or the Working Capital Facility or any
facility replacing, refunding or refinancing the Working Capital Loan;
(f) Lessor's Liens, Owner Participant's Liens and Indenture
Trustee's Liens and similar Liens under any Other Operative Document;
and
(g) Permitted Encumbrances.
"Permitted Secured Indebtedness" shall mean Indebtedness that
is secured (including any Permitted Working Capital Indebtedness) by a Lien on
any assets of the Lessee; provided, however, that not more than $25,000,000 of
such Indebtedness may be other than secured Permitted Working Capital
Indebtedness.
"Permitted Subordinated Indebtedness" shall mean Indebtedness,
not to exceed $100,000,000, which Indebtedness shall by its terms (a) be payable
on a subordinated basis to the payment of all Rent under the Lease and all rent
under all Other Leases and Related Leases and the funding of all reserves under
the Depositary Agreement and only from the Distribution Account and to the
extent a Distribution is permitted pursuant to Section 6.2 of the Participation
Agreement, (b) shall have no right to declare a default with respect to
non-payment of principal or interest, (c) shall have no rights of acceleration
or rights of enforcement against, or permit or result in any Lien on any assets
(including the Assigned Assets) of, the Lessee and (d) have no rights to
participate as a debtholding creditor in any bankruptcy proceedings.
"Permitted Working Capital Indebtedness" shall mean
Indebtedness incurred for working capital purposes.
"Person" shall mean any individual, corporation, cooperative,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"PJM" shall mean the Pennsylvania, New Jersey and Maryland
power pool.
"Plan" shall mean any "employee benefit plan" within the
meaning of Section 3(3) of ERISA which is maintained in whole or in part for
current or former employees (or any beneficiary thereof) of the Lessee or any
ERISA Affiliate; included in this category shall be any multiemployer plan (as
defined in Section 4001(a)(3) of ERISA) to which the Lessee or any ERISA
Affiliate is making or accruing an obligation
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to make contributions, or has within the five-year period ending on the Closing
Date made or accrued an obligation to make contributions.
"Power Production Business" shall mean the development,
operation or substantial active ownership (as opposed to substantial passive
ownership investments, including those in which an investor may assume some
active management as an incident to its investment) of competitive power
production facilities.
"Power Production Company" shall mean an electric utility or
electric generating company or other entity which is significantly engaged as a
seller, trader or generator of generating capacity or energy.
"PPA" shall mean an arm's-length, executed, valid and binding
power purchase agreement between AEE or any AEE Subsidiary and a third party
relating to the purchase and sale of energy or capacity.
"PPA Term" shall mean a PPA or series of PPAs with a term of
at least five consecutive years, during which AEE or AEE 2 has a legally valid
and binding contract for the sale at a scheduled price of all or a portion of
the capacity and energy to a third party purchaser or third party purchasers,
each of whose senior unsecured long-term debt credit rating is at least
Investment Grade; provided, however, that the ratio of all AEE Revenues received
under such PPA(s) to the Fixed Charges and Operating and Maintenance Costs
(other than variable costs associated with energy production not associated with
a PPA) is at least 1.0 to 1.0; and provided, further, that no such PPA has any
advance payment or tracking account obligations or other form of refundable
revenues and the PPA and any other related documents provide reasonable linkage
between revenues and costs (such reasonable linkage to be confirmed by a
qualified independent consultant; provided, that costs, unless otherwise
contracted, shall be assumed to escalate with inflation). Notwithstanding the
foregoing, with the consent of the Owner Participant (to be determined in its
sole discretion), a "PPA Term" shall mean a period of at least two consecutive
years during which AEE or AEE 2, as applicable, has a PPA or series of PPAs for
the sale at a scheduled price of 75% or more of the capacity and energy of the
Facility, the Related Facility and the Additional Facilities to a third party
purchaser or third party purchasers whose senior unsecured long-term debt rating
is at least Investment Grade.
"Pricing Assumptions" shall mean the "Pricing Assumptions"
attached as Schedule 2 to the Participation Agreement.
"Prime Rate" shall mean, for any day, a floating rate equal to
the prime, base or equivalent rate of interest announced from time to time by
Bankers Trust
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Company, or if such rate is not available, the rate publicly quoted from time to
time by The Wall Street Journal as the "base rate on corporate loans at large
U.S. money center commercial banks" (or, if The Wall Street Journal ceases
quoting a base rate of the type described, the highest per annum rate of
interest published by the Federal Reserve Board in Federal Reserve statistical
release H.15 (519) entitled "Selected Interest Rates" as the bank prime loan
rate or its equivalent).
"Pro Forma" shall mean pro forma projections prepared by AEE
(and utilizing reasonable assumptions provided by a qualified independent
consultant selected by AEE and reasonably acceptable to the Owner Participant,
provided that, upon notice given to the Owner Participant from AEE, unless the
Owner Participant shall object to such selection by AEE within 10 Business Days
of receipt of notice thereof, such consultant shall be deemed acceptable by the
Owner Participant) in accordance with Prudent Industry Practice and, to the
extent applicable, Section 5.17 of the Participation Agreement, made in good
faith and setting forth all material assumptions therein.
"Pro Forma Balance Sheet" shall mean an unaudited condensed
pro forma consolidated balance sheet of AEE and its Consolidated Subsidiaries as
of the Closing Date.
"Proceeds" shall mean the proceeds from the sale of the Pass
Through Certificates by the Pass Through Trusts to the Certificateholders on the
Closing Date.
"Prudent Industry Practice" shall mean, at a particular time,
(a) any of the practices, methods and acts engaged in or approved by a
significant portion of the non-franchised electric generating industry in the
United States at such time, or (b) with respect to any matter to which clause
(a) does not apply, any of the practices, methods and acts which, in the
exercise of reasonable judgment at the time the decision was made, could have
been expected to accomplish the desired result at a reasonable cost consistent
with good business practices, reliability, safety and expedition and (c) in any
event, a standard of care and usage no less than that which the Lessee and its
Affiliates would apply with respect to other similar properties owned, leased or
operated by them. "Prudent Industry Practice" is not intended to be limited to
the optimum practice, method or act to the exclusion of all others, but rather
to be a spectrum of possible practices, methods or acts having due regard for,
among other things, manufacturers' warranties and the requirements of any
Governmental Entity of competent jurisdiction, insurers and the requirements of
the Operative Documents.
"PUA Provider" shall mean either (a) a financial institution,
the senior unsecured long term debt rating of which is rated at least Aa3 by
▇▇▇▇▇'▇ and AA- by S&P or (b) a financial institution which had previously been
a PUA Provider under the
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applicable Payment Undertaking Agreement and which has provided collateral in
the amounts required by such Payment Undertaking Agreement in an amount equal to
or exceeding the amount referenced in clause (d) of the definition of Payment
Undertaking Agreement.
"PUHCA" shall mean the Public Utility Holding Company Act of
1935.
"Purchase Price" shall mean the amount set forth on
Definitions Schedule 1.
"Rail Assets" shall mean the assets from time to time of
Somerset Railroad.
"Rail Credit Facility" shall mean (a) that certain credit
facility in the principal amount of $26 million extended by CIBC ▇▇▇▇▇▇▇▇▇▇▇
Corp. to Somerset Railroad and (b) to the extent not prohibited under the Coal
Hauling Agreement, any other credit facility or lending arrangement (including,
without limitation, any term loan, revolving loan or letter of credit facility)
extended to Somerset Railroad by any other Person, to replace such credit
facility.
"Rating Agencies" shall mean S&P and ▇▇▇▇▇'▇.
"Real Property" shall mean the parcel of land described in
Exhibit A to the Deed. The Real Property includes the Facility Site but excludes
the Facility.
"Reasonable Basis" for a position shall exist if tax counsel
may properly advise reporting such position on a tax return in accordance with
Formal Opinion 85-352 issued by the Standing Committee on Ethics and
Professional Responsibility of the American Bar Association (or any successor to
such opinion).
"Rebuilding Closing Date" shall have the meaning specified in
Section 10.3(g) of the Lease.
"Receiving Party" shall have the meaning specified in Section
16.16 of the Participation Agreement.
"Redemption Date" shall mean, when used with respect to any
Note to be redeemed, the date fixed for such redemption by or pursuant to the
Indenture or the respective Note, which date shall be a Termination Date.
"Registrar" shall have the meaning specified in Section 2.8 of
the Indenture.
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"Regulatory Event of Loss" shall mean an Event of Loss
described in clause (d) of the definition of "Event of Loss".
"Related Assets" shall mean the Related Facility, together
with the land upon which the Related Facility is located.
"Related Facility" shall mean the ▇▇▇▇▇▇▇▇ Station, which
consists of two coal-fired, steam turbine generating units (Unit 1, placed in
operation in 1955, and Unit 2, placed in operation in 1958) with a combined
generating capacity of 306 MW (Unit 1 Section 150MW, Unit 2 Section 156 MW)
located on the east shore of Cayuga Lake near the town of Lansing, New York,
including all assets and property constituting a part thereof.
"Related Facility Site" shall mean the parcel of land
described in Exhibit A to the site lease and the site sublease of the Related
Facility.
"Related Lease" shall mean each "Facility Lease Agreement", on
substantially the same terms and conditions as under the Lease, and dated the
same date as the Lease Financing, relating to the lease financing of the Related
Facility.
"Related Lessee" shall mean a lessee with respect to any
Related Lease.
"Related Lessor" shall mean a lessor with respect to any
Related Lease.
"Related Owner Participant" shall mean an owner participant
with respect to any Related Leases.
"Related Party" shall mean, with respect to any Person or its
successors and assigns, an Affiliate of such Person or its successors and
assigns and any director, officer, shareholder, partner, member, manager,
servant, employee or agent of that Person or any such Affiliate or their
respective successors and assigns; provided, that the Trustee and the Lessor
shall not be treated as Related Parties to each other and neither the Lessor nor
the Trustee shall be treated as a Related Party to the Owner Participant except
that, for purposes of Section 10 of the Participation Agreement, the Lessor will
be treated as a Related Party to the Owner Participant to the extent that the
Lessor acts on the express direction or with the express written consent of the
Owner Participant.
"Related Site Lease" shall mean the Site Lease Agreement
(▇▇▇▇▇▇▇▇ A-1), dated as of May 1, 1999, between the Ground Lessor and the
Ground Lessee.
"Renewal Option" shall mean the option of the Lessee to renew
the Lease pursuant to Section 15 of the Lease for either an Evergreen Renewal
Term or a FMV Renewal Term.
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"Renewal Rent" shall mean the Basic Rent payable during any
Evergreen Renewal Term or FMV Renewal Term, in each case as determined in
accordance with Section 15.3 of the Lease.
"Renewal Term" shall mean any Evergreen Renewal Term or any
FMV Renewal Term.
"Rent" shall mean Basic Rent and Supplemental Rent.
"Rent Payment Account" shall have the meaning specified in
Section 2.2 of the Depositary Agreement.
"Rent Payment Date" shall mean each January 2 and July 2,
commencing January 2, 2000, to and including the Lease Expiration Date.
"Rent Payment Period" shall mean in the case of the first Rent
Payment Period the period commencing on the Closing Date and ending on January
2, 2000 and thereafter each six-month period (or such shorter period in the case
of the last period during the applicable Lease Term) (a) commencing on the day
after each Rent Payment Date through and including the Lease Expiration Date and
(b) during any Renewal Term, on the day after each Rent Payment Date through but
excluding the expiration of such Renewal Term.
"Rent Reserve Account" shall have the meaning specified in
Section 2.2 of the Depositary Agreement.
"Rent Reserve Account Required Balance" shall mean an amount
equal to the sum of the maximum aggregate semi-annual payments in the
immediately succeeding three-year period of (a) Basic Rent (other than
Deferrable Payments), and (b) all other Fixed Charges Scheduled to be Paid
during any semi-annual period ending on a Rent Payment Date; provided, however,
that for the purposes of the above calculation, Basic Rent due on January 2,
2000 shall be calculated as the product of (x) 78.9% and (y) Basic Rent (other
than Deferrable Payments) payable on January 2, 2000.
"Rent Reserve Account Payment Undertaking Agreement" shall
mean, the Rent Reserve Account Payment Undertaking Agreement, dated as of May 1,
1999, among AEE, ▇▇▇▇▇▇▇ Facility Trust A-1, ▇▇▇▇▇▇▇▇ Facility Trust A-1,
▇▇▇▇▇▇▇ Facility Trust A-2, ▇▇▇▇▇▇▇▇ Facility Trust A-2, ▇▇▇▇▇▇▇ Facility Trust
B-1, ▇▇▇▇▇▇▇▇ Facility Trust B-1, ▇▇▇▇▇▇▇ Facility Trust B-2, ▇▇▇▇▇▇▇▇ Facility
Trust B-2, ▇▇▇▇▇▇▇ Facility Trust C-1, ▇▇▇▇▇▇▇▇ Facility Trust C-1, ▇▇▇▇▇▇▇
Facility Trust C-2, ▇▇▇▇▇▇▇▇ Facility Trust C-2 and
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▇▇▇▇▇▇ Guaranty Trust Company of New York, or any other Payment Undertaking
Agreement in effect from time to time in respect of the Rent Reserve Account.
"Replacement Component" shall have the meaning specified in
Section 7.2(a) of the Lease.
"Replacement Event" shall mean (a) in the case of any
Additional Liquidity Letter of Credit, either (i) the rating of the senior
unsecured debt of the issuer of such Additional Liquidity Letter of Credit being
downgraded below A3 by ▇▇▇▇▇'▇ or A- by S&P and the failure of AEE to provide
any letter of credit that satisfies the requirements of an Additional Liquidity
Letter of Credit specified in the definition of such term within 30 days, or
(ii) the occurrence within the next 15 days of the expiration date of any
Additional Liquidity Letter of Credit and the failure of AEE to provide any
letter of credit that satisfies the requirements of an Additional Liquidity
Letter of Credit specified in the definition of such term; and (b) in the case
of any Payment Undertaking Agreement, the downgrade of the senior unsecured long
term debt rating of the PUA Provider below Aa3 by ▇▇▇▇▇'▇ or AA- by S&P and
failure of the PUA Provider to provide collateral in an amount equal to or
exceeding the amount set forth on a schedule attached to such Payment
Undertaking Agreement.
"Required Coverage Ratio" shall mean (a) for any period during
a PPA Term, a Coverage Ratio of 1.50 to 1.00 and (b) for any period that is not
a PPA Term, a Coverage Ratio of 1.70 to 1.00, and (iii) for any period which
spans the beginning or ending of a PPA Term a pro rata Coverage Ratio between
1.70 to 1.00 and 1.50 to 1.00 based on the number of days in the period which
belong to a PPA Term (the "PPA Days") calculated by subtracting (i) the product
of (1) .20 and (2) the fraction obtained by dividing the number of PPA Days by
the number of days in such period from (ii) 1.70.
"Required Modification" shall have the meaning specified in
Section 8.1 of the Lease.
"Requisition" shall have the meaning specified in clause (c)
of the definition of "Event of Loss."
"Reserve Accounts" shall mean the Rent Reserve Account, the
Special Rent Reserve Account and the Additional Liquidity Account.
"Response Plan" shall have the meaning described in Section
5.5(b) of the Lease.
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"Responsible Officer" shall mean, (a) with respect to any
Person, its Chairman of the Board, its President, any Senior Vice President, the
Chief Financial Officer, any Vice President, the Treasurer or any other
management employee (i) that has the power to take the action in question and
has been authorized, directly or indirectly, by the Board of Directors of such
Person, (ii) working under the direct supervision of such Chairman of the Board,
President, Senior Vice President, Chief Financial Officer, Vice President or
Treasurer and (iii) whose responsibilities include the administration of the
transactions and agreements contemplated by the Operative Documents and, in the
case of AEE, the management of the Facility or the Related Facility or the
Additional Facilities, as applicable and (b) with respect to the Trustee, the
Indenture Trustee, the Pass Through Trustees and the Depositary Agent, an
officer in their respective corporate trust departments.
"Return Engineering Report" shall mean an engineering report
prepared and certified by the Independent Engineer or another qualified
independent engineer (satisfactory to the Lessee and the Lessor) pursuant to
Section 5.6 of the Lease.
"Return Environmental Report" shall mean a Phase I
environmental assessment report and a Phase II environmental assessment report.
"Revenues" shall have the meaning set forth in the Granting
Clause of the Indenture.
"Revenue Account" shall have the meaning set forth in Section
2.2 of the Depositary Agreement.
"Reviewing Environmental Consultant" shall mean Dames & ▇▇▇▇▇
Group.
"Reviewing Insurance Consultant" shall mean Sedgwick of
Tennessee, Inc.
"Reviewing Market Consultant" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇.
"S&P" shall mean Standard & Poor's Rating Services, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Scheduled to be Paid" shall mean, with respect to any
liability or expense for any period, the amount of such liability or expense
scheduled to be paid during such period or the amount of such liability or
expense that would have been scheduled to be paid during such period had the
payment schedule with respect to such liability or
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expense been divided equally into successive periods having a duration equal to
the duration of such period.
"SCR" shall mean the selective catalytic reduction system to
be constructed and installed on the Facility Site pursuant to the EPC Contract.
"Secured Indenture Indebtedness" shall have the meaning
specified in the Granting Clause of the Indenture.
"Securities Act" shall mean the Securities Act of 1933.
"Security" shall have the same meaning as in Section 2(1) of
the Securities Act.
"Severable Modification" shall mean, with respect to the
Facility, Related Facility and either of the Additional Facilities, any
Modification that is readily removable without causing material damage to such
facility.
"Site Lease" shall mean the Site Lease Agreement (▇▇▇▇▇▇▇
A-1), dated as of May 1, 1999, between the Ground Lessor and the Ground Lessee.
"Site Lease Term" shall have the meaning specified in Section
3.1 of the Site Lease.
"Site Sublease" shall mean the Site Sublease Agreement
(▇▇▇▇▇▇▇ A-1), dated as of May 1, 1999, between the Ground Sublessor and the
Ground Sublessee.
"Site Sublease Term" shall have the meaning specified in
Section 3.1 of the Site Sublease.
"Somerset Railroad" shall mean Somerset Railroad Corp., a New
York corporation and a wholly-owned Subsidiary of AES NY3.
"Special Lessee Transfer" shall have the meaning specified in
Section 14 of the Participation Agreement.
"Special Lessee Transfer Amount" shall mean, for any date, in
connection with the purchase of the Beneficial Interest (a) in the case of a
Burdensome Buyout Event under Section 13 of the Lease, the applicable Burdensome
Buyout Price minus the principal amount of, and accrued interest on, the Lessor
Notes scheduled (in accordance with the payment terms of the Lessor Notes) to be
due on such date and (b) in the case of
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a Regulatory Event of Loss, the Equity Portion of Termination Value determined
as of the applicable Termination Date.
"Special Lessee Transfer Event" shall mean the occurrence of a
Regulatory Event of Loss, or a Burdensome Buyout Event.
"Special Rent Reserve Account" shall have the meaning set
forth in Section 2.2 of the Depositary Agreement.
"Special Rent Reserve Account Required Balance" shall mean,
during a Special Rent Reserve Period, an amount equal to (a) prior to the fifth
anniversary of the Closing Date, (i) the maximum aggregate payment of Basic Rent
(other than Deferrable Payments) expected to become due on any three successive
Basic Rent payment dates in the immediately succeeding three-year period minus
(ii) the amount set forth in clause (a) of the definition of the Rent Reserve
Account Required Balance, or (b) after the fifth anniversary of the Closing
Date, (i) the maximum aggregate payment of Basic Rent (other than Deferrable
Payments) expected to become due on any two successive Basic Rent payment dates
in the immediately succeeding three-year period minus (ii) the amount set forth
in clause (a) of the definition of the Rent Reserve Account Required Balance.
For the purpose of this definition, Basic Rent due on January 2, 2000 shall be
the product of (i) 78.9% and (ii) Basic Rent (other than Deferrable Payments)
payable on January 2, 2000.
"Special Rent Reserve Account Payment Undertaking Agreement"
shall mean a Payment Undertaking Agreement available in support of the Special
Rent Reserve Account Required Balance as determined pursuant to Section 3.9 of
the Depositary Agreement.
"Special Rent Reserve Period" shall mean, at any time prior to
January 2, 2029, the period commencing upon the occurrence of (a) the senior
unsecured long-term debt of the ultimate parent of AEE being rated lower than B+
by S&P and (b) the nonfulfillment of the Required Coverage Ratio and ending on
the date that either of the events specified in clause (a) or (b) no longer
exists.
"Subsidiary" shall mean, with respect to any Person (the
"parent"), any corporation or other entity of which sufficient securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other Persons performing similar functions are at the
time directly or indirectly owned by such parent.
"Supplemental Financing" shall have the meaning specified in
Section 12.1 of the Participation Agreement.
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"Supplemental Rent" shall mean any and all amounts,
liabilities and obligations (other than Basic Rent) which AEE assumes or agrees
to pay under the Operative Documents or the Registration Rights Agreement dated
May 11, 1999 between AEE and the Initial Purchasers (whether or not identified
as "Supplemental Rent") to the Lessor or any other Person, including, but not
limited to, Termination Value.
"Support Agreements" shall mean the Site Lease, the Facilities
Support Agreement, the Coal Hauling Agreement, the Interconnection Agreement and
any other document or agreement (including easements and rights of way) that
provide similar or related support rights for the lease, use, operation,
maintenance and monitoring of the Facility and the Facility Site.
"Survey" shall mean the survey of the Facility Site, dated
March 29, 1999, prepared by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C., which, inter alia, shows
the location of the Facility thereon.
"Tax" or "Taxes" shall mean all fees, taxes (including,
without limitation, income taxes, sales taxes, use taxes, stamp taxes,
value-added taxes, ad valorem taxes and property taxes (personal and real,
tangible and intangible)), levies, assessments, withholdings and other charges
and impositions of any nature, plus all related interest, penalties, fines and
additions to tax, now or hereafter imposed by any federal, state, local or
foreign government or other taxing authority.
"Tax Advance" shall have the meaning specified in Section
10.2(g)(iii)(D) of the Participation Agreement.
"Tax Assumptions" shall mean the items described in Section 2
of the Tax Indemnity Agreement.
"Tax Benefit" shall have the meaning specified in Section
10.2(e) of the Participation Agreement.
"Tax Claim" shall have the meaning specified in Section
10.2(g)(i) of the Participation Agreement.
"Tax Event" shall mean any event or transaction that will be a
taxable transaction to the direct or indirect holders of the Lessor Notes
(including any Certificateholder).
"Tax Indemnitee" shall have the meaning specified in Section
10.2(a) of the Participation Agreement.
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"Tax Indemnity Agreement" shall mean the Tax Indemnity
Agreement (▇▇▇▇▇▇▇ A-1), dated as of May 1, 1999, between the Owner Participant
and the Lessee.
"Tax Law Change" shall mean any enactment, promulgation,
release or adoption of, amendment to or change (excluding those changes that
affect the alternative minimum tax provisions) in, or any administrative
rulings, pronouncements, judicial decisions or any executive orders that may
affect the application of, the Code, Treasury Regulations, Revenue Rulings or
Revenue Procedures.
"Tax Representation" shall mean each of the items described in
Section 5 of the Tax Indemnity Agreement.
"Termination Date" shall mean each of the monthly dates during
the Lease Term identified as a "Termination Date" on Schedule 2 of the Lease.
"Termination Value" for any Termination Date shall mean the
Termination Value set forth on Schedule 2 of the Lease for such Termination
Date.
"Third Party Easements" shall have the meaning specified in
the recitals to the Site Lease.
"Third Party Easement Areas" shall have the meaning specified
in the recitals to the Site Lease
"Title Policies" shall mean (a) the Owner Trust's Policy, (b)
AEE's Fee Policy and (c) the Lender's Policy.
"Total Capitalization" shall mean, with respect to any Person,
the sum, without duplication, of (a) total common stock equity or analogous
ownership interests of such Person, (b) preferred stock and preferred securities
of such Person, (c) additional paid in capital or analogous interests of such
Person, (d) retained earnings of such Person and (e) the aggregate principal
amount of Indebtedness of such Person then outstanding.
"Transaction Expenses" shall mean:
(a) the cost of reproducing and printing the Operative
Documents and the Offering Circular and all costs and fees, including
but not limited to title insurance premiums and costs, survey costs,
filing and recording fees incurred in connection with the execution,
delivery, filing and recording of the Memorandum of Lease, the
Memorandum of Site Lease, the Memorandum of Site Sublease and any other
Operative Document
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and any other document required to be filed or recorded pursuant to the
provisions hereof or of any other Operative Document and any Uniform
Commercial Code filing fees in respect of the perfection of any
security interests created by any of the Operative Documents or as
otherwise reasonably required by the Lessor or the Indenture Trustee;
(b) the reasonable fees and expenses of Paul, Hastings,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the Owner Participant, Winthrop,
Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Initial Purchasers, the
Depositary Agent, the Indenture Trustee and the Pass Through Trustees
for their services rendered in connection with the Lease Transaction;
and the reasonable fees and expenses of Morris, James, Hitchens &
▇▇▇▇▇▇▇▇, counsel for the Trustee and a portion of the fees and
expenses of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Lessee;
(c) the initial fees and expenses of the Trustee, the
Indenture Trustee and the Pass Through Trustees in connection with the
execution and delivery of the Participation Agreement and the other
Operative Documents to which either one is or will be a party;
(d) the fees and expenses of the Independent Appraiser, for
its services rendered in connection with delivering the Closing
Appraisal;
(e) the fees and expenses of the Reviewing Environmental
Consultant, the Reviewing Market Consultant and the Reviewing Insurance
Consultant, for its services rendered in connection with the Lease
Financing.
(f) any mortgage recording taxes;
(g) the fees and expenses of the Lead Underwriter;
(h) the reasonable out-of-pocket expenses of the Owner
Participant and the Lessor; and
(i) the reasonable out-of-pocket expenses of ▇▇▇▇▇▇▇ & ▇▇▇▇▇
in its capacity as advisor to the Owner Participant (including in
respect of computer time).
Notwithstanding the foregoing, Transaction Expenses shall not
include internal costs and expenses such as salaries and overhead of whatsoever
kind or nature nor costs incurred by the parties to the Participation Agreement
pursuant to arrangements with third parties for services (other than those
expressly referred to above), such as financial analysis and consulting,
advisory services, and costs of a similar nature.
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"Transaction Party" shall mean, individually or collectively,
as the context shall require, all or any of the parties to the Participation
Agreement.
"Transfer" shall mean any assignment, transfer, sale,
hypothecation or other disposal.
"Treasury Regulations" shall mean regulations, including
temporary regulations, promulgated under the Code.
"Trust" shall mean the trust created pursuant to the Trust
Agreement.
"Trust Agreement" shall mean that certain Trust Agreement
(▇▇▇▇▇▇▇ A-1), dated as of May 1, 1999, by and between the Owner Participant and
the Trustee.
"Trust Company" shall have the meaning specified in the Trust
Agreement.
"Trustee" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity, but solely as Trustee under
the Trust Agreement and each other Person which may from time to time be acting
as Trustee in accordance with the provisions of the Trust Agreement.
"Trust Estate" shall mean all the estate, right, title and
interest of the Lessor in, to and under the Undivided Interest, the Ground
Interest and the Operative Documents, including all funds advanced to the Lessor
by the Owner Participant, all installments and other payments of Basic Rent and
Supplemental Rent (including Termination Value) under the Lease and all
condemnation awards, purchase price, sale proceeds, insurance proceeds and all
other proceeds (including any and all proceeds received by the Trust after the
termination of the Lease resulting from the sale, lease or others disposition of
the Undivided Interest), of any kind for or with respect thereto, but excluding
Excepted Payments and Excepted Rights.
"2017 Lessor Note" shall have the meaning specified in Section
2.2 of the Indenture.
"2029 Lessor Note" shall have the meaning specified in Section
2.2 of the Indenture.
"Undivided Interest" shall mean an undivided ownership
interest in a percentage set forth in Definitions Schedule 1 in the Facility as
tenant in common with the other owners of the Facility pursuant to the Other
Leases, including the right to nonexclusive possession of the Facility.
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"Uniform Commercial Code" or "UCC" shall mean the Uniform
Commercial Code as in effect in the applicable jurisdiction.
"U.S. Government Obligations" shall mean securities that are
(a) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (b) obligations of a person controlled
or supervised by and acting as an agency or instrumentality of the United States
of America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case
under clause (a) or (b) are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such U.S. Government Obligation
or a specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction in the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
"Verifier" shall have the meaning specified in Section 3.6(e)
of the Lease.
"Working Capital Facility" shall mean the Working Capital
Facility, dated as of May 10, 1999, between Credit Suisse First Boston and AEE.
"Working Capital Provider" shall mean Credit Suisse First
Boston.
"Year 2000 Issue" shall have the meaning specified in Section
3.1(bb) of the Participation Agreement.
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SCHEDULE 1
Equity Investment: $18,414,401.97
Indenture Trustee's Account: Bankers Trust Company
ABA # ▇▇▇▇▇▇▇▇▇
Account #▇▇▇▇▇▇▇▇
Ref: ▇▇▇▇▇▇▇ A-1 Indenture
A/C # 27729
Lease Expiration Date: February 15, 2033
Lessor's Account: Wilmington Trust Company
ABA # ▇▇▇▇▇▇▇▇▇
Account # 48430-0
Ref: AES Eastern Energy
▇▇▇▇▇▇▇ Facility Trust A-1
Lessor's Percentage and Percentage
of Undivided Interest: 25.000%
Owner Participant's Account: Key Bank
Cleveland, OH
ABA #▇▇▇-▇▇▇-▇▇▇
Account #359681006912
Ref: DCC Project Finance Fourteen, Inc.
Purchase Price: $112,125,000.00